Correlation Between Compania and Fiplasto
Can any of the company-specific risk be diversified away by investing in both Compania and Fiplasto 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 Fiplasto 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 Fiplasto SA, you can compare the effects of market volatilities on Compania and Fiplasto 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 Fiplasto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Fiplasto.
Diversification Opportunities for Compania and Fiplasto
Average diversification
The 3 months correlation between Compania and Fiplasto is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Transporte and Fiplasto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiplasto SA 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 Fiplasto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiplasto SA has no effect on the direction of Compania i.e., Compania and Fiplasto go up and down completely randomly.
Pair Corralation between Compania and Fiplasto
Assuming the 90 days trading horizon Compania is expected to generate 1.56 times less return on investment than Fiplasto. In addition to that, Compania is 1.5 times more volatile than Fiplasto SA. It trades about 0.09 of its total potential returns per unit of risk. Fiplasto SA is currently generating about 0.21 per unit of volatility. If you would invest 29,100 in Fiplasto SA on September 2, 2024 and sell it today you would earn a total of 2,500 from holding Fiplasto SA or generate 8.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania de Transporte vs. Fiplasto SA
Performance |
| Timeline |
| Compania de Transporte |
| Fiplasto SA |
Compania and Fiplasto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania and Fiplasto
The main advantage of trading using opposite Compania and Fiplasto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania position performs unexpectedly, Fiplasto 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 Fiplasto will offset losses from the drop in Fiplasto's long position.| Compania vs. Transportadora de Gas | Compania vs. Harmony Gold Mining | Compania vs. Telecom Argentina | Compania vs. United States Steel |
| Fiplasto vs. Harmony Gold Mining | Fiplasto vs. Agrometal SAI | Fiplasto vs. Compania de Transporte | Fiplasto vs. Telecom Argentina |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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