Correlation Between Inepar SA and Howmet Aerospace

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

Diversification Opportunities for Inepar SA and Howmet Aerospace

-0.88
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Inepar and Howmet is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Inepar SA Indstria and Howmet Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Howmet Aerospace 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 Howmet Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Howmet Aerospace has no effect on the direction of Inepar SA i.e., Inepar SA and Howmet Aerospace go up and down completely randomly.

Pair Corralation between Inepar SA and Howmet Aerospace

Assuming the 90 days trading horizon Inepar SA Indstria is expected to under-perform the Howmet Aerospace. In addition to that, Inepar SA is 5.65 times more volatile than Howmet Aerospace. It trades about -0.06 of its total potential returns per unit of risk. Howmet Aerospace is currently generating about 0.11 per unit of volatility. If you would invest  69,049  in Howmet Aerospace on October 8, 2024 and sell it today you would earn a total of  1,331  from holding Howmet Aerospace or generate 1.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Inepar SA Indstria  vs.  Howmet Aerospace

 Performance 
       Timeline  
Inepar SA Indstria 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Howmet Aerospace 

Risk-Adjusted Performance

15 of 100

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

Inepar SA and Howmet Aerospace Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Inepar SA and Howmet Aerospace

The main advantage of trading using opposite Inepar SA and Howmet Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inepar SA position performs unexpectedly, Howmet Aerospace 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 Howmet Aerospace will offset losses from the drop in Howmet Aerospace's long position.
The idea behind Inepar SA Indstria and Howmet Aerospace 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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