Correlation Between Administradora Americana and Sociedad Punta

Can any of the company-specific risk be diversified away by investing in both Administradora Americana and Sociedad Punta 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 Sociedad Punta 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 Sociedad Punta del, you can compare the effects of market volatilities on Administradora Americana and Sociedad Punta 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 Sociedad Punta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Administradora Americana and Sociedad Punta.

Diversification Opportunities for Administradora Americana and Sociedad Punta

-0.67

Correlation Coefficient

Administradora Americana  Sociedad Punta

Excellent diversification

The 3 months correlation between Administradora and Sociedad is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Administradora Americana de and Sociedad Punta del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sociedad Punta del 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 Sociedad Punta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sociedad Punta del has no effect on the direction of Administradora Americana i.e., Administradora Americana and Sociedad Punta go up and down completely randomly.

Pair Corralation between Administradora Americana and Sociedad Punta

Assuming the 90 days trading horizon Administradora Americana de is expected to generate 1.77 times more return on investment than Sociedad Punta. However, Administradora Americana is 1.77 times more volatile than Sociedad Punta del. It trades about 0.25 of its potential returns per unit of risk. Sociedad Punta del is currently generating about -0.09 per unit of risk. If you would invest  16,396  in Administradora Americana de on September 13, 2024 and sell it today you would earn a total of  3,632  from holding Administradora Americana de or generate 22.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	81.36%
Values	Daily Returns

Administradora Americana de  vs.  Sociedad Punta del

Administradora Americana

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Administradora Americana de are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Administradora Americana unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sociedad Punta del

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sociedad Punta del has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Sociedad Punta is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Administradora Americana and Sociedad Punta

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

The idea behind Administradora Americana de and Sociedad Punta del 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.