Correlation Between Sociedad and Invertec Foods

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

By analyzing existing cross correlation between Sociedad De Inversiones and Invertec Foods SA, you can compare the effects of market volatilities on Sociedad and Invertec Foods 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 Sociedad with a short position of Invertec Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sociedad and Invertec Foods.

Diversification Opportunities for Sociedad and Invertec Foods

0.0

Correlation Coefficient

Sociedad  Invertec Foods

Pay attention - limited upside

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

Pair Corralation between Sociedad and Invertec Foods

If you would invest (100.00) in Invertec Foods SA on October 21, 2024 and sell it today you would earn a total of  100.00  from holding Invertec Foods SA or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sociedad De Inversiones  vs.  Invertec Foods SA

Sociedad De Inversiones

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sociedad De Inversiones has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Sociedad is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Invertec Foods SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invertec Foods SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Invertec Foods is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sociedad and Invertec Foods

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

The idea behind Sociedad De Inversiones and Invertec Foods SA 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.