Correlation Between Vale SA and General De
Can any of the company-specific risk be diversified away by investing in both Vale SA and General De 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 Vale SA and General De into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA and General de Alquiler, you can compare the effects of market volatilities on Vale SA and General De 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 Vale SA with a short position of General De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and General De.
Diversification Opportunities for Vale SA and General De
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vale and General is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and General de Alquiler in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General de Alquiler and Vale 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 Vale SA are associated (or correlated) with General De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General de Alquiler has no effect on the direction of Vale SA i.e., Vale SA and General De go up and down completely randomly.
Pair Corralation between Vale SA and General De
Assuming the 90 days trading horizon Vale SA is expected to generate 16.36 times less return on investment than General De. In addition to that, Vale SA is 1.01 times more volatile than General de Alquiler. It trades about 0.01 of its total potential returns per unit of risk. General de Alquiler is currently generating about 0.08 per unit of volatility. If you would invest 122.00 in General de Alquiler on September 12, 2024 and sell it today you would earn a total of 12.00 from holding General de Alquiler or generate 9.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vale SA vs. General de Alquiler
Performance |
| Timeline |
| Vale SA |
| General de Alquiler |
Vale SA and General De Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale SA and General De
The main advantage of trading using opposite Vale SA and General De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA position performs unexpectedly, General De 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 General De will offset losses from the drop in General De's long position.| Vale SA vs. Labiana Health SA | Vale SA vs. International Consolidated Airlines | Vale SA vs. Tier1 Technology SA | Vale SA vs. Azaria Rental SOCIMI |
| General De vs. Azaria Rental SOCIMI | General De vs. Tier1 Technology SA | General De vs. NH Hoteles | General De vs. Borges Agricultural Industrial |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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