Correlation Between Este Lauder and Tres Tentos

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

By analyzing existing cross correlation between The Este Lauder and Tres Tentos Agroindustrial, you can compare the effects of market volatilities on Este Lauder and Tres Tentos 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 Este Lauder with a short position of Tres Tentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Este Lauder and Tres Tentos.

Diversification Opportunities for Este Lauder and Tres Tentos

-0.5

Correlation Coefficient

Este Lauder  Tres Tentos

Very good diversification

The 3 months correlation between Este and Tres is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding The Este Lauder and Tres Tentos Agroindustrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tres Tentos Agroindu and Este Lauder 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 The Este Lauder are associated (or correlated) with Tres Tentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tres Tentos Agroindu has no effect on the direction of Este Lauder i.e., Este Lauder and Tres Tentos go up and down completely randomly.

Pair Corralation between Este Lauder and Tres Tentos

Assuming the 90 days trading horizon The Este Lauder is expected to under-perform the Tres Tentos. But the stock apears to be less risky and, when comparing its historical volatility, The Este Lauder is 2.12 times less risky than Tres Tentos. The stock trades about -0.53 of its potential returns per unit of risk. The Tres Tentos Agroindustrial is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  1,409  in Tres Tentos Agroindustrial on October 10, 2024 and sell it today you would lose (81.00) from holding Tres Tentos Agroindustrial or give up 5.75% of portfolio value over 90 days.

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

The Este Lauder  vs.  Tres Tentos Agroindustrial

Este Lauder

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Este Lauder has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Tres Tentos Agroindu

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tres Tentos Agroindustrial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Tres Tentos unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Este Lauder and Tres Tentos

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

The idea behind The Este Lauder and Tres Tentos Agroindustrial 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.