Correlation Between Corporacion America and BZAM

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

By analyzing existing cross correlation between Corporacion America Airports and BZAM, you can compare the effects of market volatilities on Corporacion America and BZAM 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 Corporacion America with a short position of BZAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporacion America and BZAM.

Diversification Opportunities for Corporacion America and BZAM

0.0

Correlation Coefficient

Corporacion America  BZAM

Pay attention - limited upside

The 3 months correlation between Corporacion and BZAM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Corporacion America Airports and BZAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BZAM and Corporacion America 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 Corporacion America Airports are associated (or correlated) with BZAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BZAM has no effect on the direction of Corporacion America i.e., Corporacion America and BZAM go up and down completely randomly.

Pair Corralation between Corporacion America and BZAM

If you would invest  0.00  in BZAM on December 30, 2024 and sell it today you would earn a total of  0.00  from holding BZAM or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Corporacion America Airports  vs.  BZAM

Corporacion America

Risk-Adjusted Performance

Weak

Over the last 90 days Corporacion America Airports has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Corporacion America is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

BZAM

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Corporacion America and BZAM

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

The idea behind Corporacion America Airports and BZAM 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.