Correlation Between Compania and AFP Provida

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

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

Diversification Opportunities for Compania and AFP Provida

0.0

Correlation Coefficient

Compania  AFP Provida

Pay attention - limited upside

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

Pair Corralation between Compania and AFP Provida

If you would invest  300,350  in AFP Provida on September 13, 2024 and sell it today you would earn a total of  2,480  from holding AFP Provida or generate 0.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Compania De Inversiones  vs.  AFP Provida

Compania De Inversiones

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compania De Inversiones has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Compania is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

AFP Provida

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AFP Provida are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, AFP Provida is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Compania and AFP Provida

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

The idea behind Compania De Inversiones and AFP Provida 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.