Correlation Between ACS Actividades and Acerinox

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

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

Diversification Opportunities for ACS Actividades and Acerinox

0.77

Correlation Coefficient

ACS Actividades  Acerinox

Poor diversification

The 3 months correlation between ACS and Acerinox is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ACS Actividades de and Acerinox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acerinox and ACS Actividades 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 ACS Actividades de are associated (or correlated) with Acerinox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acerinox has no effect on the direction of ACS Actividades i.e., ACS Actividades and Acerinox go up and down completely randomly.

Pair Corralation between ACS Actividades and Acerinox

Assuming the 90 days trading horizon ACS Actividades is expected to generate 1.17 times less return on investment than Acerinox. But when comparing it to its historical volatility, ACS Actividades de is 1.07 times less risky than Acerinox. It trades about 0.2 of its potential returns per unit of risk. Acerinox is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  926.00  in Acerinox on December 1, 2024 and sell it today you would earn a total of  205.00  from holding Acerinox or generate 22.14% return on investment over 90 days.

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

ACS Actividades de  vs.  Acerinox

ACS Actividades de

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ACS Actividades de are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ACS Actividades exhibited solid returns over the last few months and may actually be approaching a breakup point.

Acerinox

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Acerinox are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Acerinox exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ACS Actividades and Acerinox

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

The idea behind ACS Actividades de and Acerinox 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.