Correlation Between Banco De and Rimac Seguros

Can any of the company-specific risk be diversified away by investing in both Banco De and Rimac Seguros 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 Rimac Seguros 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 Rimac Seguros y, you can compare the effects of market volatilities on Banco De and Rimac Seguros 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 Rimac Seguros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco De and Rimac Seguros.

Diversification Opportunities for Banco De and Rimac Seguros

0.09

Correlation Coefficient

Banco De  Rimac Seguros

Significant diversification

The 3 months correlation between Banco and Rimac is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Banco de Credito and Rimac Seguros y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rimac Seguros y 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 Rimac Seguros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rimac Seguros y has no effect on the direction of Banco De i.e., Banco De and Rimac Seguros go up and down completely randomly.

Pair Corralation between Banco De and Rimac Seguros

Assuming the 90 days trading horizon Banco de Credito is expected to generate 0.86 times more return on investment than Rimac Seguros. However, Banco de Credito is 1.17 times less risky than Rimac Seguros. It trades about 0.06 of its potential returns per unit of risk. Rimac Seguros y is currently generating about 0.01 per unit of risk. If you would invest  353.00  in Banco de Credito on October 12, 2024 and sell it today you would earn a total of  57.00  from holding Banco de Credito or generate 16.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	34.97%
Values	Daily Returns

Banco de Credito  vs.  Rimac Seguros y

Banco de Credito

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banco de Credito are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Banco De exhibited solid returns over the last few months and may actually be approaching a breakup point.

Rimac Seguros y

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Rimac Seguros y has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unfluctuating technical and fundamental indicators, Rimac Seguros exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banco De and Rimac Seguros

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

The idea behind Banco de Credito and Rimac Seguros y 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.

Check out your portfolio center.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.