Correlation Between HMC SA and AFP Capital

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

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

Diversification Opportunities for HMC SA and AFP Capital

0.0

Correlation Coefficient

HMC SA  AFP Capital

Pay attention - limited upside

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

Pair Corralation between HMC SA and AFP Capital

If you would invest  25,000  in AFP Capital SA on September 13, 2024 and sell it today you would earn a total of  0.00  from holding AFP Capital SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	15.25%
Values	Daily Returns

HMC SA ADMINISTRADORA  vs.  AFP Capital SA

HMC SA ADMINISTRADORA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HMC SA ADMINISTRADORA has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable basic indicators, HMC SA is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

AFP Capital SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFP Capital SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, AFP Capital is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with HMC SA and AFP Capital

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

The idea behind HMC SA ADMINISTRADORA and AFP Capital 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.