Correlation Between Industria and Aritzia

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

By analyzing existing cross correlation between Industria de Diseo and Aritzia, you can compare the effects of market volatilities on Industria and Aritzia 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 Industria with a short position of Aritzia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industria and Aritzia.

Diversification Opportunities for Industria and Aritzia

-0.1

Correlation Coefficient

Industria  Aritzia

Good diversification

The 3 months correlation between Industria and Aritzia is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Industria de Diseo and Aritzia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aritzia and Industria 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 Industria de Diseo are associated (or correlated) with Aritzia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aritzia has no effect on the direction of Industria i.e., Industria and Aritzia go up and down completely randomly.

Pair Corralation between Industria and Aritzia

Assuming the 90 days horizon Industria de Diseo is expected to generate 0.61 times more return on investment than Aritzia. However, Industria de Diseo is 1.64 times less risky than Aritzia. It trades about 0.08 of its potential returns per unit of risk. Aritzia is currently generating about 0.02 per unit of risk. If you would invest  2,573  in Industria de Diseo on September 25, 2024 and sell it today you would earn a total of  2,709  from holding Industria de Diseo or generate 105.29% return on investment over 90 days.

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

Industria de Diseo  vs.  Aritzia

Industria de Diseo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industria de Diseo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Industria is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Aritzia

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aritzia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aritzia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Industria and Aritzia

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

The idea behind Industria de Diseo and Aritzia 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 Commodity Directory module to find actively traded commodities issued by global exchanges.