Correlation Between Viscofan and Construcciones
Can any of the company-specific risk be diversified away by investing in both Viscofan and Construcciones 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 Viscofan and Construcciones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Viscofan and Construcciones y Auxiliar, you can compare the effects of market volatilities on Viscofan and Construcciones 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 Viscofan with a short position of Construcciones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viscofan and Construcciones.
Diversification Opportunities for Viscofan and Construcciones
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Viscofan and Construcciones is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Viscofan and Construcciones y Auxiliar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construcciones y Auxiliar and Viscofan 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 Viscofan are associated (or correlated) with Construcciones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construcciones y Auxiliar has no effect on the direction of Viscofan i.e., Viscofan and Construcciones go up and down completely randomly.
Pair Corralation between Viscofan and Construcciones
Assuming the 90 days trading horizon Viscofan is expected to generate 1.0 times more return on investment than Construcciones. However, Viscofan is 1.0 times less risky than Construcciones. It trades about 0.04 of its potential returns per unit of risk. Construcciones y Auxiliar is currently generating about 0.04 per unit of risk. If you would invest 5,254 in Viscofan on October 21, 2024 and sell it today you would earn a total of 776.00 from holding Viscofan or generate 14.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Viscofan vs. Construcciones y Auxiliar
Performance |
| Timeline |
| Viscofan |
| Construcciones y Auxiliar |
Viscofan and Construcciones Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Viscofan and Construcciones
The main advantage of trading using opposite Viscofan and Construcciones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viscofan position performs unexpectedly, Construcciones 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 Construcciones will offset losses from the drop in Construcciones' long position.The idea behind Viscofan and Construcciones y Auxiliar pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Construcciones vs. Banco Santander | Construcciones vs. Telefonica | Construcciones vs. Banco Bilbao Vizcaya | Construcciones vs. Petroleo Brasileiro SA |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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