Correlation Between Inepar SA and Eternit SA

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

Diversification Opportunities for Inepar SA and Eternit SA

0.04

Correlation Coefficient

Inepar SA  Eternit SA

Significant diversification

The 3 months correlation between Inepar and Eternit is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Inepar SA Indstria and Eternit SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eternit SA 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 Eternit SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eternit SA has no effect on the direction of Inepar SA i.e., Inepar SA and Eternit SA go up and down completely randomly.

Pair Corralation between Inepar SA and Eternit SA

Assuming the 90 days trading horizon Inepar SA Indstria is expected to under-perform the Eternit SA. In addition to that, Inepar SA is 1.26 times more volatile than Eternit SA. It trades about -0.08 of its total potential returns per unit of risk. Eternit SA is currently generating about 0.02 per unit of volatility. If you would invest  570.00  in Eternit SA on September 12, 2024 and sell it today you would earn a total of  8.00  from holding Eternit SA or generate 1.4% return on investment over 90 days.

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

Inepar SA Indstria  vs.  Eternit SA

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.

Eternit SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eternit SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Eternit SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Inepar SA and Eternit SA

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

The idea behind Inepar SA Indstria and Eternit SA 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.