Correlation Between Ternium SA and Compania
Can any of the company-specific risk be diversified away by investing in both Ternium SA and Compania 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 Ternium SA and Compania into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ternium SA DRC and Compania de Transporte, you can compare the effects of market volatilities on Ternium SA and Compania 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 Ternium SA with a short position of Compania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ternium SA and Compania.
Diversification Opportunities for Ternium SA and Compania
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ternium and Compania is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ternium SA DRC and Compania de Transporte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Transporte and Ternium SA 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 Ternium SA DRC are associated (or correlated) with Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Transporte has no effect on the direction of Ternium SA i.e., Ternium SA and Compania go up and down completely randomly.
Pair Corralation between Ternium SA and Compania
Assuming the 90 days trading horizon Ternium SA DRC is expected to under-perform the Compania. But the stock apears to be less risky and, when comparing its historical volatility, Ternium SA DRC is 1.83 times less risky than Compania. The stock trades about -0.23 of its potential returns per unit of risk. The Compania de Transporte is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 183,000 in Compania de Transporte on August 23, 2024 and sell it today you would earn a total of 38,000 from holding Compania de Transporte or generate 20.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ternium SA DRC vs. Compania de Transporte
Performance |
| Timeline |
| Ternium SA DRC |
| Compania de Transporte |
Ternium SA and Compania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ternium SA and Compania
The main advantage of trading using opposite Ternium SA and Compania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ternium SA position performs unexpectedly, Compania 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 Compania will offset losses from the drop in Compania's long position.| Ternium SA vs. United States Steel | Ternium SA vs. Pfizer Inc | Ternium SA vs. Garovaglio y Zorraquin | Ternium SA vs. Telecom Argentina |
| Compania vs. United States Steel | Compania vs. Pfizer Inc | Compania vs. Garovaglio y Zorraquin | Compania vs. Ternium SA DRC |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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