Correlation Between Acerinox and Viscofan

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

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

Diversification Opportunities for Acerinox and Viscofan

0.46

Correlation Coefficient

Acerinox  Viscofan

Very weak diversification

The 3 months correlation between Acerinox and Viscofan is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Acerinox and Viscofan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viscofan and Acerinox 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 Acerinox are associated (or correlated) with Viscofan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viscofan has no effect on the direction of Acerinox i.e., Acerinox and Viscofan go up and down completely randomly.

Pair Corralation between Acerinox and Viscofan

Assuming the 90 days trading horizon Acerinox is expected to generate 1.16 times more return on investment than Viscofan. However, Acerinox is 1.16 times more volatile than Viscofan. It trades about 0.03 of its potential returns per unit of risk. Viscofan is currently generating about 0.02 per unit of risk. If you would invest  843.00  in Acerinox on September 13, 2024 and sell it today you would earn a total of  174.00  from holding Acerinox or generate 20.64% return on investment over 90 days.

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

Acerinox  vs.  Viscofan

Acerinox

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Acerinox are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Acerinox may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Viscofan

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Acerinox and Viscofan

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

The idea behind Acerinox and Viscofan 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.