Correlation Between Aenza SAA and Construction Partners

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

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

Diversification Opportunities for Aenza SAA and Construction Partners

-0.65

Correlation Coefficient

Aenza SAA  Construction Partners

Excellent diversification

The 3 months correlation between Aenza and Construction is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Aenza SAA and Construction Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construction Partners and Aenza SAA 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 Aenza SAA are associated (or correlated) with Construction Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construction Partners has no effect on the direction of Aenza SAA i.e., Aenza SAA and Construction Partners go up and down completely randomly.

Pair Corralation between Aenza SAA and Construction Partners

If you would invest  7,994  in Construction Partners on August 31, 2024 and sell it today you would earn a total of  2,120  from holding Construction Partners or generate 26.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

Aenza SAA  vs.  Construction Partners

Aenza SAA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aenza SAA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Aenza SAA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Construction Partners

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Construction Partners are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Construction Partners exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aenza SAA and Construction Partners

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

The idea behind Aenza SAA and Construction Partners 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 CEOs Directory module to screen CEOs from public companies around the world.