Correlation Between Inmobiliaria Colonial and Mercal Inmuebles

Can any of the company-specific risk be diversified away by investing in both Inmobiliaria Colonial and Mercal Inmuebles 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 Inmobiliaria Colonial and Mercal Inmuebles into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Inmobiliaria Colonial and Mercal Inmuebles

-0.77

Correlation Coefficient

Inmobiliaria Colonial  Mercal Inmuebles

Pay attention - limited upside

The 3 months correlation between Inmobiliaria and Mercal is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Inmobiliaria Colonial SA and Mercal Inmuebles Socimi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercal Inmuebles Socimi and Inmobiliaria Colonial 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 Inmobiliaria Colonial SA are associated (or correlated) with Mercal Inmuebles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercal Inmuebles Socimi has no effect on the direction of Inmobiliaria Colonial i.e., Inmobiliaria Colonial and Mercal Inmuebles go up and down completely randomly.

Pair Corralation between Inmobiliaria Colonial and Mercal Inmuebles

Assuming the 90 days trading horizon Inmobiliaria Colonial SA is expected to under-perform the Mercal Inmuebles. But the stock apears to be less risky and, when comparing its historical volatility, Inmobiliaria Colonial SA is 1.53 times less risky than Mercal Inmuebles. The stock trades about -0.22 of its potential returns per unit of risk. The Mercal Inmuebles Socimi is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,460  in Mercal Inmuebles Socimi on September 13, 2024 and sell it today you would earn a total of  460.00  from holding Mercal Inmuebles Socimi or generate 10.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

Inmobiliaria Colonial SA  vs.  Mercal Inmuebles Socimi

Inmobiliaria Colonial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inmobiliaria Colonial SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Mercal Inmuebles Socimi

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mercal Inmuebles Socimi are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Mercal Inmuebles may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Inmobiliaria Colonial and Mercal Inmuebles

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

The idea behind Inmobiliaria Colonial SA and Mercal Inmuebles Socimi 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.