Correlation Between Becle SA and Arca Continental

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

By analyzing existing cross correlation between Becle SA de and Arca Continental SAB, you can compare the effects of market volatilities on Becle SA and Arca Continental 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 Becle SA with a short position of Arca Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Becle SA and Arca Continental.

Diversification Opportunities for Becle SA and Arca Continental

-0.62

Correlation Coefficient

Becle SA  Arca Continental

Excellent diversification

The 3 months correlation between Becle and Arca is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Becle SA de and Arca Continental SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arca Continental SAB and Becle SA 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 Becle SA de are associated (or correlated) with Arca Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arca Continental SAB has no effect on the direction of Becle SA i.e., Becle SA and Arca Continental go up and down completely randomly.

Pair Corralation between Becle SA and Arca Continental

Assuming the 90 days horizon Becle SA de is expected to generate 2.29 times more return on investment than Arca Continental. However, Becle SA is 2.29 times more volatile than Arca Continental SAB. It trades about 0.08 of its potential returns per unit of risk. Arca Continental SAB is currently generating about 0.15 per unit of risk. If you would invest  86.00  in Becle SA de on December 10, 2024 and sell it today you would earn a total of  5.00  from holding Becle SA de or generate 5.81% return on investment over 90 days.

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

Becle SA de  vs.  Arca Continental SAB

Becle SA de

Risk-Adjusted Performance

Very Weak

Over the last 90 days Becle SA de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Arca Continental SAB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arca Continental SAB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Arca Continental reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Becle SA and Arca Continental

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

The idea behind Becle SA de and Arca Continental SAB 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.