Correlation Between Administradora Americana and Cuprum

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

By analyzing existing cross correlation between Administradora Americana de and Cuprum, you can compare the effects of market volatilities on Administradora Americana and Cuprum 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 Administradora Americana with a short position of Cuprum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Administradora Americana and Cuprum.

Diversification Opportunities for Administradora Americana and Cuprum

0.44

Correlation Coefficient

Administradora Americana  Cuprum

Very weak diversification

The 3 months correlation between Administradora and Cuprum is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Administradora Americana de and Cuprum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cuprum and Administradora Americana 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 Administradora Americana de are associated (or correlated) with Cuprum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cuprum has no effect on the direction of Administradora Americana i.e., Administradora Americana and Cuprum go up and down completely randomly.

Pair Corralation between Administradora Americana and Cuprum

Assuming the 90 days trading horizon Administradora Americana is expected to generate 2.92 times less return on investment than Cuprum. But when comparing it to its historical volatility, Administradora Americana de is 2.24 times less risky than Cuprum. It trades about 0.13 of its potential returns per unit of risk. Cuprum is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4,901  in Cuprum on December 1, 2024 and sell it today you would earn a total of  1,460  from holding Cuprum or generate 29.79% return on investment over 90 days.

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

Administradora Americana de  vs.  Cuprum

Administradora Americana

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Administradora Americana de are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Administradora Americana may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cuprum

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cuprum are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cuprum sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Administradora Americana and Cuprum

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

The idea behind Administradora Americana de and Cuprum 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..