Correlation Between Credicorp and MICRONIC MYDATA

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

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

Diversification Opportunities for Credicorp and MICRONIC MYDATA

-0.14

Correlation Coefficient

Credicorp  MICRONIC MYDATA

Good diversification

The 3 months correlation between Credicorp and MICRONIC is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Credicorp and MICRONIC MYDATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MICRONIC MYDATA and Credicorp 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 Credicorp are associated (or correlated) with MICRONIC MYDATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MICRONIC MYDATA has no effect on the direction of Credicorp i.e., Credicorp and MICRONIC MYDATA go up and down completely randomly.

Pair Corralation between Credicorp and MICRONIC MYDATA

Assuming the 90 days horizon Credicorp is expected to generate 1.38 times less return on investment than MICRONIC MYDATA. But when comparing it to its historical volatility, Credicorp is 1.42 times less risky than MICRONIC MYDATA. It trades about 0.08 of its potential returns per unit of risk. MICRONIC MYDATA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,828  in MICRONIC MYDATA on October 25, 2024 and sell it today you would earn a total of  1,048  from holding MICRONIC MYDATA or generate 37.06% return on investment over 90 days.

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

Credicorp  vs.  MICRONIC MYDATA

Credicorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Credicorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Credicorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MICRONIC MYDATA

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MICRONIC MYDATA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, MICRONIC MYDATA is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Credicorp and MICRONIC MYDATA

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

The idea behind Credicorp and MICRONIC MYDATA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.