Correlation Between Corporacion Aceros and Compania

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

By analyzing existing cross correlation between Corporacion Aceros Arequipa and Compania de Minas, you can compare the effects of market volatilities on Corporacion Aceros and Compania 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 Corporacion Aceros with a short position of Compania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporacion Aceros and Compania.

Diversification Opportunities for Corporacion Aceros and Compania

0.01

Correlation Coefficient

Corporacion Aceros  Compania

Significant diversification

The 3 months correlation between Corporacion and Compania is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Corporacion Aceros Arequipa and Compania de Minas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Minas and Corporacion Aceros 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 Corporacion Aceros Arequipa are associated (or correlated) with Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Minas has no effect on the direction of Corporacion Aceros i.e., Corporacion Aceros and Compania go up and down completely randomly.

Pair Corralation between Corporacion Aceros and Compania

Assuming the 90 days trading horizon Corporacion Aceros Arequipa is expected to generate 0.48 times more return on investment than Compania. However, Corporacion Aceros Arequipa is 2.07 times less risky than Compania. It trades about 0.0 of its potential returns per unit of risk. Compania de Minas is currently generating about -0.08 per unit of risk. If you would invest  103.00  in Corporacion Aceros Arequipa on October 26, 2024 and sell it today you would lose (1.00) from holding Corporacion Aceros Arequipa or give up 0.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Corporacion Aceros Arequipa  vs.  Compania de Minas

Corporacion Aceros

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corporacion Aceros Arequipa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Corporacion Aceros is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Compania de Minas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compania de Minas 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 primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Corporacion Aceros and Compania

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

The idea behind Corporacion Aceros Arequipa and Compania de Minas 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.