Correlation Between Acerinox and Synalloy

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

By analyzing existing cross correlation between Acerinox SA ADR and Synalloy, you can compare the effects of market volatilities on Acerinox and Synalloy 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 Synalloy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acerinox and Synalloy.

Diversification Opportunities for Acerinox and Synalloy

0.34

Correlation Coefficient

Acerinox  Synalloy

Weak diversification

The 3 months correlation between Acerinox and Synalloy is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Acerinox SA ADR and Synalloy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synalloy 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 SA ADR are associated (or correlated) with Synalloy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synalloy has no effect on the direction of Acerinox i.e., Acerinox and Synalloy go up and down completely randomly.

Pair Corralation between Acerinox and Synalloy

Assuming the 90 days horizon Acerinox SA ADR is expected to under-perform the Synalloy. In addition to that, Acerinox is 1.12 times more volatile than Synalloy. It trades about -0.01 of its total potential returns per unit of risk. Synalloy is currently generating about 0.2 per unit of volatility. If you would invest  907.00  in Synalloy on October 15, 2024 and sell it today you would earn a total of  218.00  from holding Synalloy or generate 24.04% return on investment over 90 days.

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

Acerinox SA ADR  vs.  Synalloy

Acerinox SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Synalloy

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Synalloy are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Synalloy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acerinox and Synalloy

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

The idea behind Acerinox SA ADR and Synalloy 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.