Correlation Between Compania and Ternium SA
Can any of the company-specific risk be diversified away by investing in both Compania and Ternium SA 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 Ternium SA 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 Ternium SA DRC, you can compare the effects of market volatilities on Compania and Ternium SA 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 Ternium SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Ternium SA.
Diversification Opportunities for Compania and Ternium SA
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Compania and Ternium is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Transporte and Ternium SA DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ternium SA DRC 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 Ternium SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ternium SA DRC has no effect on the direction of Compania i.e., Compania and Ternium SA go up and down completely randomly.
Pair Corralation between Compania and Ternium SA
Assuming the 90 days trading horizon Compania de Transporte is expected to under-perform the Ternium SA. In addition to that, Compania is 2.33 times more volatile than Ternium SA DRC. It trades about -0.01 of its total potential returns per unit of risk. Ternium SA DRC is currently generating about 0.1 per unit of volatility. If you would invest 865,000 in Ternium SA DRC on November 3, 2024 and sell it today you would earn a total of 24,000 from holding Ternium SA DRC or generate 2.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania de Transporte vs. Ternium SA DRC
Performance |
| Timeline |
| Compania de Transporte |
| Ternium SA DRC |
Compania and Ternium SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania and Ternium SA
The main advantage of trading using opposite Compania and Ternium SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania position performs unexpectedly, Ternium SA 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 Ternium SA will offset losses from the drop in Ternium SA's long position.| Compania vs. Harmony Gold Mining | Compania vs. Agrometal SAI | Compania vs. Telecom Argentina | Compania vs. United States Steel |
| Ternium SA vs. Telecom Argentina | Ternium SA vs. Transportadora de Gas | Ternium SA vs. Harmony Gold Mining | Ternium SA vs. Compania de Transporte |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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