Correlation Between Compania Introductora and Ternium SA

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

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

Diversification Opportunities for Compania Introductora and Ternium SA

-0.37

Correlation Coefficient

Compania Introductora  Ternium SA

Very good diversification

The 3 months correlation between Compania and Ternium is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Compania Introductora de and Ternium SA DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ternium SA DRC and Compania Introductora 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 Compania Introductora de are associated (or correlated) with Ternium SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ternium SA DRC has no effect on the direction of Compania Introductora i.e., Compania Introductora and Ternium SA go up and down completely randomly.

Pair Corralation between Compania Introductora and Ternium SA

Assuming the 90 days trading horizon Compania Introductora de is expected to under-perform the Ternium SA. In addition to that, Compania Introductora is 1.67 times more volatile than Ternium SA DRC. It trades about -0.02 of its total potential returns per unit of risk. Ternium SA DRC is currently generating about 0.16 per unit of volatility. If you would invest  852,000  in Ternium SA DRC on December 30, 2024 and sell it today you would earn a total of  160,500  from holding Ternium SA DRC or generate 18.84% return on investment over 90 days.

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

Compania Introductora de  vs.  Ternium SA DRC

Compania Introductora

Risk-Adjusted Performance

Very Weak

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

Ternium SA DRC

Risk-Adjusted Performance

Good

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

Pair Trading with Compania Introductora and Ternium SA

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

The idea behind Compania Introductora de and Ternium SA DRC 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.