Correlation Between Howmet Aerospace and Inepar SA

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

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

Diversification Opportunities for Howmet Aerospace and Inepar SA

-0.53

Correlation Coefficient

Howmet Aerospace  Inepar SA

Excellent diversification

The 3 months correlation between Howmet and Inepar is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Howmet Aerospace and Inepar SA Indstria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inepar SA Indstria and Howmet Aerospace 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 Howmet Aerospace are associated (or correlated) with Inepar SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inepar SA Indstria has no effect on the direction of Howmet Aerospace i.e., Howmet Aerospace and Inepar SA go up and down completely randomly.

Pair Corralation between Howmet Aerospace and Inepar SA

Assuming the 90 days trading horizon Howmet Aerospace is expected to generate 0.37 times more return on investment than Inepar SA. However, Howmet Aerospace is 2.71 times less risky than Inepar SA. It trades about 0.11 of its potential returns per unit of risk. Inepar SA Indstria is currently generating about -0.01 per unit of risk. If you would invest  64,764  in Howmet Aerospace on October 9, 2024 and sell it today you would earn a total of  4,186  from holding Howmet Aerospace or generate 6.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.3%
Values	Daily Returns

Howmet Aerospace  vs.  Inepar SA Indstria

Howmet Aerospace

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Howmet Aerospace are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Howmet Aerospace sustained solid returns over the last few months and may actually be approaching a breakup point.

Inepar SA Indstria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inepar SA Indstria has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Howmet Aerospace and Inepar SA

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

The idea behind Howmet Aerospace and Inepar SA Indstria 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.