Correlation Between IAR SA and IM Vinaria

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

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

Diversification Opportunities for IAR SA and IM Vinaria

0.44

Correlation Coefficient

IAR SA  IM Vinaria

Very weak diversification

The 3 months correlation between IAR and WINE is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding IAR SA and IM Vinaria Purcari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IM Vinaria Purcari and IAR SA 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 IAR SA are associated (or correlated) with IM Vinaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IM Vinaria Purcari has no effect on the direction of IAR SA i.e., IAR SA and IM Vinaria go up and down completely randomly.

Pair Corralation between IAR SA and IM Vinaria

Assuming the 90 days trading horizon IAR SA is expected to generate 2.83 times more return on investment than IM Vinaria. However, IAR SA is 2.83 times more volatile than IM Vinaria Purcari. It trades about 0.04 of its potential returns per unit of risk. IM Vinaria Purcari is currently generating about 0.08 per unit of risk. If you would invest  1,250  in IAR SA on December 28, 2024 and sell it today you would earn a total of  50.00  from holding IAR SA or generate 4.0% return on investment over 90 days.

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

IAR SA  vs.  IM Vinaria Purcari

IAR SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IAR SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IAR SA is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

IM Vinaria Purcari

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IM Vinaria Purcari are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IM Vinaria is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IAR SA and IM Vinaria

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

The idea behind IAR SA and IM Vinaria Purcari 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.