Correlation Between Banco De and Pesquera Exalmar

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

By analyzing existing cross correlation between Banco de Credito and Pesquera Exalmar SAA, you can compare the effects of market volatilities on Banco De and Pesquera Exalmar 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 Banco De with a short position of Pesquera Exalmar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco De and Pesquera Exalmar.

Diversification Opportunities for Banco De and Pesquera Exalmar

0.73

Correlation Coefficient

Banco De  Pesquera Exalmar

Poor diversification

The 3 months correlation between Banco and Pesquera is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Banco de Credito and Pesquera Exalmar SAA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pesquera Exalmar SAA and Banco De 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 Banco de Credito are associated (or correlated) with Pesquera Exalmar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pesquera Exalmar SAA has no effect on the direction of Banco De i.e., Banco De and Pesquera Exalmar go up and down completely randomly.

Pair Corralation between Banco De and Pesquera Exalmar

Assuming the 90 days trading horizon Banco de Credito is expected to generate 0.59 times more return on investment than Pesquera Exalmar. However, Banco de Credito is 1.7 times less risky than Pesquera Exalmar. It trades about 0.03 of its potential returns per unit of risk. Pesquera Exalmar SAA is currently generating about -0.09 per unit of risk. If you would invest  380.00  in Banco de Credito on October 26, 2024 and sell it today you would earn a total of  9.00  from holding Banco de Credito or generate 2.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	25.0%
Values	Daily Returns

Banco de Credito  vs.  Pesquera Exalmar SAA

Banco de Credito

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Banco de Credito are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Banco De is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pesquera Exalmar SAA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Banco De and Pesquera Exalmar

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

The idea behind Banco de Credito and Pesquera Exalmar SAA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..