Correlation Between Adocia and Nacon Sa

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

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

Diversification Opportunities for Adocia and Nacon Sa

0.31

Correlation Coefficient

Adocia  Nacon Sa

Weak diversification

The 3 months correlation between Adocia and Nacon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Adocia and Nacon Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nacon Sa and Adocia 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 Adocia are associated (or correlated) with Nacon Sa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nacon Sa has no effect on the direction of Adocia i.e., Adocia and Nacon Sa go up and down completely randomly.

Pair Corralation between Adocia and Nacon Sa

Assuming the 90 days trading horizon Adocia is expected to under-perform the Nacon Sa. In addition to that, Adocia is 1.24 times more volatile than Nacon Sa. It trades about -0.19 of its total potential returns per unit of risk. Nacon Sa is currently generating about -0.11 per unit of volatility. If you would invest  76.00  in Nacon Sa on December 30, 2024 and sell it today you would lose (15.00) from holding Nacon Sa or give up 19.74% of portfolio value over 90 days.

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

Adocia  vs.  Nacon Sa

Adocia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adocia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nacon Sa

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nacon Sa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Adocia and Nacon Sa

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

The idea behind Adocia and Nacon Sa 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.