Correlation Between Inepar SA and A1ME34

Can any of the company-specific risk be diversified away by investing in both Inepar SA and A1ME34 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 Inepar SA and A1ME34 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Inepar SA Indstria and A1ME34, you can compare the effects of market volatilities on Inepar SA and A1ME34 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 Inepar SA with a short position of A1ME34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inepar SA and A1ME34.

Diversification Opportunities for Inepar SA and A1ME34

-0.87

Correlation Coefficient

Inepar SA  A1ME34

Pay attention - limited upside

The 3 months correlation between Inepar and A1ME34 is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Inepar SA Indstria and A1ME34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A1ME34 and Inepar 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 Inepar SA Indstria are associated (or correlated) with A1ME34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A1ME34 has no effect on the direction of Inepar SA i.e., Inepar SA and A1ME34 go up and down completely randomly.

Pair Corralation between Inepar SA and A1ME34

Assuming the 90 days trading horizon Inepar SA Indstria is expected to under-perform the A1ME34. In addition to that, Inepar SA is 2.22 times more volatile than A1ME34. It trades about -0.07 of its total potential returns per unit of risk. A1ME34 is currently generating about 0.1 per unit of volatility. If you would invest  3,307  in A1ME34 on September 25, 2024 and sell it today you would earn a total of  1,408  from holding A1ME34 or generate 42.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.2%
Values	Daily Returns

Inepar SA Indstria  vs.  A1ME34

Inepar SA Indstria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inepar SA Indstria has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

A1ME34

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in A1ME34 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, A1ME34 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inepar SA and A1ME34

The main advantage of trading using opposite Inepar SA and A1ME34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inepar SA position performs unexpectedly, A1ME34 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 A1ME34 will offset losses from the drop in A1ME34's long position.

The idea behind Inepar SA Indstria and A1ME34 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.