Correlation Between Corporacion America and Ebara

Can any of the company-specific risk be diversified away by investing in both Corporacion America and Ebara 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 Ebara 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 Ebara, you can compare the effects of market volatilities on Corporacion America and Ebara 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 Ebara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporacion America and Ebara.

Diversification Opportunities for Corporacion America and Ebara

0.0

Correlation Coefficient

Corporacion America  Ebara

Pay attention - limited upside

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

Pair Corralation between Corporacion America and Ebara

Given the investment horizon of 90 days Corporacion America is expected to generate 40.94 times less return on investment than Ebara. But when comparing it to its historical volatility, Corporacion America Airports is 22.88 times less risky than Ebara. It trades about 0.05 of its potential returns per unit of risk. Ebara is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,413  in Ebara on September 30, 2024 and sell it today you would lose (3,213) from holding Ebara or give up 72.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	50.67%
Values	Daily Returns

Corporacion America Airports  vs.  Ebara

Corporacion America

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacion America Airports are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Corporacion America may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ebara

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ebara has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ebara 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 Ebara

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

The idea behind Corporacion America Airports and Ebara 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.