Correlation Between Crdito Real and Financiera Independencia

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

By analyzing existing cross correlation between Crdito Real SAB and Financiera Independencia SAB, you can compare the effects of market volatilities on Crdito Real and Financiera Independencia 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 Crdito Real with a short position of Financiera Independencia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crdito Real and Financiera Independencia.

Diversification Opportunities for Crdito Real and Financiera Independencia

0.0

Correlation Coefficient

Crdito Real  Financiera Independencia

Pay attention - limited upside

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

Pair Corralation between Crdito Real and Financiera Independencia

If you would invest  750.00  in Financiera Independencia SAB on September 24, 2024 and sell it today you would earn a total of  50.00  from holding Financiera Independencia SAB or generate 6.67% return on investment over 90 days.

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

Crdito Real SAB  vs.  Financiera Independencia SAB

Crdito Real SAB

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Crdito Real SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Crdito Real is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Financiera Independencia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Financiera Independencia SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Crdito Real and Financiera Independencia

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

The idea behind Crdito Real SAB and Financiera Independencia SAB 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.