Correlation Between Viscofan and Talgo SA
Can any of the company-specific risk be diversified away by investing in both Viscofan and Talgo 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 Viscofan and Talgo SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Viscofan and Talgo SA, you can compare the effects of market volatilities on Viscofan and Talgo 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 Viscofan with a short position of Talgo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viscofan and Talgo SA.
Diversification Opportunities for Viscofan and Talgo SA
Very good diversification
The 3 months correlation between Viscofan and Talgo is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Viscofan and Talgo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talgo SA 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 Talgo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talgo SA has no effect on the direction of Viscofan i.e., Viscofan and Talgo SA go up and down completely randomly.
Pair Corralation between Viscofan and Talgo SA
Assuming the 90 days trading horizon Viscofan is expected to generate 0.62 times more return on investment than Talgo SA. However, Viscofan is 1.61 times less risky than Talgo SA. It trades about 0.03 of its potential returns per unit of risk. Talgo SA is currently generating about -0.09 per unit of risk. If you would invest 5,878 in Viscofan on September 3, 2024 and sell it today you would earn a total of 232.00 from holding Viscofan or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Viscofan vs. Talgo SA
Performance |
| Timeline |
| Viscofan |
| Talgo SA |
Viscofan and Talgo SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Viscofan and Talgo SA
The main advantage of trading using opposite Viscofan and Talgo SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viscofan position performs unexpectedly, Talgo 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 Talgo SA will offset losses from the drop in Talgo SA's long position.The idea behind Viscofan and Talgo SA 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.| Talgo SA vs. Construcciones y Auxiliar | Talgo SA vs. Gestamp Automocion SA | Talgo SA vs. ENCE Energa y | Talgo SA vs. Tecnicas Reunidas |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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