Correlation Between CAP SA and AFP Planvital

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

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

Diversification Opportunities for CAP SA and AFP Planvital

-0.13

Correlation Coefficient

CAP SA  AFP Planvital

Good diversification

The 3 months correlation between CAP and AFP is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding CAP SA and AFP Planvital SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFP Planvital SA and CAP 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 CAP SA are associated (or correlated) with AFP Planvital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFP Planvital SA has no effect on the direction of CAP SA i.e., CAP SA and AFP Planvital go up and down completely randomly.

Pair Corralation between CAP SA and AFP Planvital

Assuming the 90 days trading horizon CAP SA is expected to under-perform the AFP Planvital. In addition to that, CAP SA is 1.04 times more volatile than AFP Planvital SA. It trades about -0.02 of its total potential returns per unit of risk. AFP Planvital SA is currently generating about 0.45 per unit of volatility. If you would invest  16,418  in AFP Planvital SA on December 30, 2024 and sell it today you would earn a total of  5,381  from holding AFP Planvital SA or generate 32.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

CAP SA  vs.  AFP Planvital SA

CAP SA

Risk-Adjusted Performance

Very Weak

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

AFP Planvital SA

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in AFP Planvital SA are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward indicators, AFP Planvital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAP SA and AFP Planvital

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

The idea behind CAP SA and AFP Planvital 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.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.