Correlation Between Capex SA and Instituto Rosenbusch

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

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

Diversification Opportunities for Capex SA and Instituto Rosenbusch

0.52

Correlation Coefficient

Capex SA  Instituto Rosenbusch

Very weak diversification

The 3 months correlation between Capex and Instituto is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Capex SA and Instituto Rosenbusch SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instituto Rosenbusch and Capex 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 Capex SA are associated (or correlated) with Instituto Rosenbusch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instituto Rosenbusch has no effect on the direction of Capex SA i.e., Capex SA and Instituto Rosenbusch go up and down completely randomly.

Pair Corralation between Capex SA and Instituto Rosenbusch

Assuming the 90 days trading horizon Capex SA is expected to generate 0.71 times more return on investment than Instituto Rosenbusch. However, Capex SA is 1.4 times less risky than Instituto Rosenbusch. It trades about 0.21 of its potential returns per unit of risk. Instituto Rosenbusch SA is currently generating about 0.07 per unit of risk. If you would invest  604,000  in Capex SA on September 4, 2024 and sell it today you would earn a total of  276,000  from holding Capex SA or generate 45.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Capex SA  vs.  Instituto Rosenbusch SA

Capex SA

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capex SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Capex SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Instituto Rosenbusch

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Instituto Rosenbusch SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Instituto Rosenbusch sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capex SA and Instituto Rosenbusch

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

The idea behind Capex SA and Instituto Rosenbusch 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..