Correlation Between Pesquera Exalmar and Rimac Seguros

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

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

Diversification Opportunities for Pesquera Exalmar and Rimac Seguros

-0.01

Correlation Coefficient

Pesquera Exalmar  Rimac Seguros

Good diversification

The 3 months correlation between Pesquera and Rimac is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Pesquera Exalmar SAA 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 Pesquera Exalmar 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 Pesquera Exalmar SAA 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 Pesquera Exalmar i.e., Pesquera Exalmar and Rimac Seguros go up and down completely randomly.

Pair Corralation between Pesquera Exalmar and Rimac Seguros

Assuming the 90 days trading horizon Pesquera Exalmar is expected to generate 3.94 times less return on investment than Rimac Seguros. But when comparing it to its historical volatility, Pesquera Exalmar SAA is 1.45 times less risky than Rimac Seguros. It trades about 0.03 of its potential returns per unit of risk. Rimac Seguros y is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  70.00  in Rimac Seguros y on October 11, 2024 and sell it today you would earn a total of  27.00  from holding Rimac Seguros y or generate 38.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.52%
Values	Daily Returns

Pesquera Exalmar SAA  vs.  Rimac Seguros y

Pesquera Exalmar SAA

Risk-Adjusted Performance

0 of 100

Very Strong

Over the last 90 days Pesquera Exalmar SAA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat unsteady primary indicators, Pesquera Exalmar sustained 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 inconsistent 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 Pesquera Exalmar and Rimac Seguros

The main advantage of trading using opposite Pesquera Exalmar and Rimac Seguros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pesquera Exalmar 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 Pesquera Exalmar SAA 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.