Correlation Between Concepcion Industrial and Aboitiz Equity

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

By analyzing existing cross correlation between Concepcion Industrial Corp and Aboitiz Equity Ventures, you can compare the effects of market volatilities on Concepcion Industrial and Aboitiz Equity 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 Concepcion Industrial with a short position of Aboitiz Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concepcion Industrial and Aboitiz Equity.

Diversification Opportunities for Concepcion Industrial and Aboitiz Equity

0.8

Correlation Coefficient

Concepcion Industrial  Aboitiz Equity

Very poor diversification

The 3 months correlation between Concepcion and Aboitiz is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Concepcion Industrial Corp and Aboitiz Equity Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aboitiz Equity Ventures and Concepcion Industrial 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 Concepcion Industrial Corp are associated (or correlated) with Aboitiz Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aboitiz Equity Ventures has no effect on the direction of Concepcion Industrial i.e., Concepcion Industrial and Aboitiz Equity go up and down completely randomly.

Pair Corralation between Concepcion Industrial and Aboitiz Equity

Assuming the 90 days trading horizon Concepcion Industrial Corp is expected to generate 0.78 times more return on investment than Aboitiz Equity. However, Concepcion Industrial Corp is 1.29 times less risky than Aboitiz Equity. It trades about -0.11 of its potential returns per unit of risk. Aboitiz Equity Ventures is currently generating about -0.11 per unit of risk. If you would invest  1,390  in Concepcion Industrial Corp on September 25, 2024 and sell it today you would lose (40.00) from holding Concepcion Industrial Corp or give up 2.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	90.91%
Values	Daily Returns

Concepcion Industrial Corp  vs.  Aboitiz Equity Ventures

Concepcion Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concepcion Industrial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Aboitiz Equity Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aboitiz Equity Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Concepcion Industrial and Aboitiz Equity

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

The idea behind Concepcion Industrial Corp and Aboitiz Equity Ventures 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.