Correlation Between Compania and Bolsas Y
Can any of the company-specific risk be diversified away by investing in both Compania and Bolsas Y at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Compania and Bolsas Y into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania de Transporte and Bolsas y Mercados, you can compare the effects of market volatilities on Compania and Bolsas Y and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Compania with a short position of Bolsas Y. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Bolsas Y.
Diversification Opportunities for Compania and Bolsas Y
Poor diversification
The 3 months correlation between Compania and Bolsas is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Transporte and Bolsas y Mercados in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolsas y Mercados and Compania is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Compania de Transporte are associated (or correlated) with Bolsas Y. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolsas y Mercados has no effect on the direction of Compania i.e., Compania and Bolsas Y go up and down completely randomly.
Pair Corralation between Compania and Bolsas Y
Assuming the 90 days trading horizon Compania de Transporte is expected to generate 1.3 times more return on investment than Bolsas Y. However, Compania is 1.3 times more volatile than Bolsas y Mercados. It trades about 0.16 of its potential returns per unit of risk. Bolsas y Mercados is currently generating about 0.21 per unit of risk. If you would invest 185,000 in Compania de Transporte on August 29, 2024 and sell it today you would earn a total of 33,000 from holding Compania de Transporte or generate 17.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania de Transporte vs. Bolsas y Mercados
Performance |
| Timeline |
| Compania de Transporte |
| Bolsas y Mercados |
Compania and Bolsas Y Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania and Bolsas Y
The main advantage of trading using opposite Compania and Bolsas Y positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania position performs unexpectedly, Bolsas Y can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bolsas Y will offset losses from the drop in Bolsas Y's long position.| Compania vs. Pampa Energia SA | Compania vs. Vista Energy, SAB | Compania vs. United States Steel | Compania vs. Central Puerto SA |
| Bolsas Y vs. Edesa Holding SA | Bolsas Y vs. Longvie SA | Bolsas Y vs. Vista Energy, SAB | Bolsas Y vs. United States Steel |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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