Correlation Between Armada Hflr and Industria

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

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

Diversification Opportunities for Armada Hflr and Industria

0.63

Correlation Coefficient

Armada Hflr  Industria

Poor diversification

The 3 months correlation between Armada and Industria is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Industria de Diseo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industria de Diseo and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Industria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industria de Diseo has no effect on the direction of Armada Hflr i.e., Armada Hflr and Industria go up and down completely randomly.

Pair Corralation between Armada Hflr and Industria

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Industria. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.8 times less risky than Industria. The stock trades about -0.32 of its potential returns per unit of risk. The Industria de Diseo is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5,171  in Industria de Diseo on October 13, 2024 and sell it today you would earn a total of  81.00  from holding Industria de Diseo or generate 1.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Armada Hflr Pr  vs.  Industria de Diseo

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Industria de Diseo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industria de Diseo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Industria is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Armada Hflr and Industria

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

The idea behind Armada Hflr Pr and Industria de Diseo 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.