Correlation Between Superior Plus and Naranja Renta

Can any of the company-specific risk be diversified away by investing in both Superior Plus and Naranja Renta 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 Superior Plus and Naranja Renta into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Superior Plus Corp and Naranja Renta Fija, you can compare the effects of market volatilities on Superior Plus and Naranja Renta 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 Superior Plus with a short position of Naranja Renta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Naranja Renta.

Diversification Opportunities for Superior Plus and Naranja Renta

-0.06

Correlation Coefficient

Superior Plus  Naranja Renta

Good diversification

The 3 months correlation between Superior and Naranja is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Naranja Renta Fija in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naranja Renta Fija and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Naranja Renta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naranja Renta Fija has no effect on the direction of Superior Plus i.e., Superior Plus and Naranja Renta go up and down completely randomly.

Pair Corralation between Superior Plus and Naranja Renta

Assuming the 90 days horizon Superior Plus Corp is expected to generate 37.01 times more return on investment than Naranja Renta. However, Superior Plus is 37.01 times more volatile than Naranja Renta Fija. It trades about 0.01 of its potential returns per unit of risk. Naranja Renta Fija is currently generating about 0.15 per unit of risk. If you would invest  413.00  in Superior Plus Corp on December 25, 2024 and sell it today you would earn a total of  1.00  from holding Superior Plus Corp or generate 0.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Superior Plus Corp  vs.  Naranja Renta Fija

Superior Plus Corp

Risk-Adjusted Performance

Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Superior Plus is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Naranja Renta Fija

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Naranja Renta Fija are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Naranja Renta is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Superior Plus and Naranja Renta

The main advantage of trading using opposite Superior Plus and Naranja Renta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, Naranja Renta 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 Naranja Renta will offset losses from the drop in Naranja Renta's long position.

The idea behind Superior Plus Corp and Naranja Renta Fija 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.