Correlation Between Corporacion America and Parker Hannifin

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

Diversification Opportunities for Corporacion America and Parker Hannifin

0.53

Correlation Coefficient

Corporacion America  Parker Hannifin

Very weak diversification

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

Pair Corralation between Corporacion America and Parker Hannifin

Given the investment horizon of 90 days Corporacion America Airports is expected to generate 1.69 times more return on investment than Parker Hannifin. However, Corporacion America is 1.69 times more volatile than Parker Hannifin. It trades about 0.15 of its potential returns per unit of risk. Parker Hannifin is currently generating about 0.1 per unit of risk. If you would invest  1,434  in Corporacion America Airports on October 3, 2024 and sell it today you would earn a total of  432.00  from holding Corporacion America Airports or generate 30.13% return on investment over 90 days.

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

Corporacion America Airports  vs.  Parker Hannifin

Corporacion America

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacion America Airports are ranked lower than 4 (%) 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 February 2025.

Parker Hannifin

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Parker Hannifin are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Parker Hannifin is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Corporacion America and Parker Hannifin

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

The idea behind Corporacion America Airports and Parker Hannifin 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.