Correlation Between Concepcion Industrial and Suntrust Home

Can any of the company-specific risk be diversified away by investing in both Concepcion Industrial and Suntrust Home 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 Suntrust Home 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 Suntrust Home Developers, you can compare the effects of market volatilities on Concepcion Industrial and Suntrust Home 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 Suntrust Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concepcion Industrial and Suntrust Home.

Diversification Opportunities for Concepcion Industrial and Suntrust Home

-0.28

Correlation Coefficient

Concepcion Industrial  Suntrust Home

Very good diversification

The 3 months correlation between Concepcion and Suntrust is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Concepcion Industrial Corp and Suntrust Home Developers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suntrust Home Developers 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 Suntrust Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suntrust Home Developers has no effect on the direction of Concepcion Industrial i.e., Concepcion Industrial and Suntrust Home go up and down completely randomly.

Pair Corralation between Concepcion Industrial and Suntrust Home

Assuming the 90 days trading horizon Concepcion Industrial Corp is expected to under-perform the Suntrust Home. But the stock apears to be less risky and, when comparing its historical volatility, Concepcion Industrial Corp is 2.0 times less risky than Suntrust Home. The stock trades about -0.07 of its potential returns per unit of risk. The Suntrust Home Developers is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  88.00  in Suntrust Home Developers on October 15, 2024 and sell it today you would earn a total of  0.00  from holding Suntrust Home Developers or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	74.55%
Values	Daily Returns

Concepcion Industrial Corp  vs.  Suntrust Home Developers

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 uncertain 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.

Suntrust Home Developers

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Suntrust Home Developers are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Suntrust Home is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Concepcion Industrial and Suntrust Home

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

The idea behind Concepcion Industrial Corp and Suntrust Home Developers 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.