Correlation Between Inepar SA and ARNC34

Can any of the company-specific risk be diversified away by investing in both Inepar SA and ARNC34 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 ARNC34 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 ARNC34, you can compare the effects of market volatilities on Inepar SA and ARNC34 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 ARNC34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inepar SA and ARNC34.

Diversification Opportunities for Inepar SA and ARNC34

-0.89

Correlation Coefficient

Inepar SA  ARNC34

Pay attention - limited upside

The 3 months correlation between Inepar and ARNC34 is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Inepar SA Indstria and ARNC34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARNC34 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 ARNC34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARNC34 has no effect on the direction of Inepar SA i.e., Inepar SA and ARNC34 go up and down completely randomly.

Pair Corralation between Inepar SA and ARNC34

Assuming the 90 days trading horizon Inepar SA Indstria is expected to under-perform the ARNC34. In addition to that, Inepar SA is 1.21 times more volatile than ARNC34. It trades about -0.07 of its total potential returns per unit of risk. ARNC34 is currently generating about 0.14 per unit of volatility. If you would invest  26,153  in ARNC34 on September 25, 2024 and sell it today you would earn a total of  42,120  from holding ARNC34 or generate 161.05% 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.  ARNC34

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.

ARNC34

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ARNC34 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ARNC34 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inepar SA and ARNC34

The main advantage of trading using opposite Inepar SA and ARNC34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inepar SA position performs unexpectedly, ARNC34 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 ARNC34 will offset losses from the drop in ARNC34's long position.

The idea behind Inepar SA Indstria and ARNC34 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.