Correlation Between Banco Actinver and Toyota

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

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

Diversification Opportunities for Banco Actinver and Toyota

0.21

Correlation Coefficient

Banco Actinver  Toyota

Modest diversification

The 3 months correlation between Banco and Toyota is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Banco Actinver SA and Toyota Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Motor and Banco Actinver 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 Actinver SA are associated (or correlated) with Toyota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toyota Motor has no effect on the direction of Banco Actinver i.e., Banco Actinver and Toyota go up and down completely randomly.

Pair Corralation between Banco Actinver and Toyota

Assuming the 90 days trading horizon Banco Actinver SA is expected to under-perform the Toyota. But the stock apears to be less risky and, when comparing its historical volatility, Banco Actinver SA is 2.34 times less risky than Toyota. The stock trades about -0.11 of its potential returns per unit of risk. The Toyota Motor is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  365,000  in Toyota Motor on December 23, 2024 and sell it today you would earn a total of  18,000  from holding Toyota Motor or generate 4.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	29.03%
Values	Daily Returns

Banco Actinver SA  vs.  Toyota Motor

Banco Actinver SA

Risk-Adjusted Performance

Very Weak

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

Toyota Motor

Risk-Adjusted Performance

OK

Over the last 90 days Toyota Motor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Toyota showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banco Actinver and Toyota

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

The idea behind Banco Actinver SA and Toyota Motor 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.