Correlation Between Applied Materials and Corporacin Actinver

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

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

Diversification Opportunities for Applied Materials and Corporacin Actinver

0.04

Correlation Coefficient

Applied Materials  Corporacin Actinver

Significant diversification

The 3 months correlation between Applied and Corporacin is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Corporacin Actinver S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacin Actinver and Applied Materials 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 Applied Materials are associated (or correlated) with Corporacin Actinver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacin Actinver has no effect on the direction of Applied Materials i.e., Applied Materials and Corporacin Actinver go up and down completely randomly.

Pair Corralation between Applied Materials and Corporacin Actinver

Assuming the 90 days trading horizon Applied Materials is expected to generate 2.62 times more return on investment than Corporacin Actinver. However, Applied Materials is 2.62 times more volatile than Corporacin Actinver S. It trades about 0.06 of its potential returns per unit of risk. Corporacin Actinver S is currently generating about 0.1 per unit of risk. If you would invest  220,698  in Applied Materials on October 27, 2024 and sell it today you would earn a total of  157,402  from holding Applied Materials or generate 71.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Applied Materials  vs.  Corporacin Actinver S

Applied Materials

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Applied Materials is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Corporacin Actinver

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacin Actinver S are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Corporacin Actinver may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Applied Materials and Corporacin Actinver

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

The idea behind Applied Materials and Corporacin Actinver S 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.