Correlation Between ACS Actividades and IES Holdings

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

Diversification Opportunities for ACS Actividades and IES Holdings

0.07

Correlation Coefficient

ACS Actividades  IES Holdings

Significant diversification

The 3 months correlation between ACS and IES is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding ACS Actividades De and IES Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IES Holdings 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 IES Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IES Holdings has no effect on the direction of ACS Actividades i.e., ACS Actividades and IES Holdings go up and down completely randomly.

Pair Corralation between ACS Actividades and IES Holdings

Assuming the 90 days horizon ACS Actividades is expected to generate 4.6 times less return on investment than IES Holdings. But when comparing it to its historical volatility, ACS Actividades De is 2.56 times less risky than IES Holdings. It trades about 0.13 of its potential returns per unit of risk. IES Holdings is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  15,715  in IES Holdings on September 12, 2024 and sell it today you would earn a total of  9,867  from holding IES Holdings or generate 62.79% return on investment over 90 days.

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

ACS Actividades De  vs.  IES Holdings

ACS Actividades De

Risk-Adjusted Performance

10 of 100

OK

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

IES Holdings

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IES Holdings are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, IES Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ACS Actividades and IES Holdings

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

The idea behind ACS Actividades De and IES Holdings 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.