Correlation Between Industrias Electro and Rimac Seguros

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

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

Diversification Opportunities for Industrias Electro and Rimac Seguros

0.0

Correlation Coefficient

Industrias Electro  Rimac Seguros

Pay attention - limited upside

The 3 months correlation between Industrias and Rimac is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Industrias Electro Quimicas 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 Industrias Electro 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 Industrias Electro Quimicas 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 Industrias Electro i.e., Industrias Electro and Rimac Seguros go up and down completely randomly.

Pair Corralation between Industrias Electro and Rimac Seguros

If you would invest  95.00  in Rimac Seguros y on December 25, 2024 and sell it today you would earn a total of  0.00  from holding Rimac Seguros y or generate 0.0% return on investment over 90 days.

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

Industrias Electro Quimicas  vs.  Rimac Seguros y

Industrias Electro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Industrias Electro Quimicas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Industrias Electro is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Rimac Seguros y

Risk-Adjusted Performance

Very Weak

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 sound technical and fundamental indicators, Rimac Seguros is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Industrias Electro and Rimac Seguros

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

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.