Correlation Between IGO and Industrias Penoles

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

By analyzing existing cross correlation between IGO Limited and Industrias Penoles Sab, you can compare the effects of market volatilities on IGO and Industrias Penoles 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 IGO with a short position of Industrias Penoles. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGO and Industrias Penoles.

Diversification Opportunities for IGO and Industrias Penoles

-0.7

Correlation Coefficient

IGO  Industrias Penoles

Excellent diversification

The 3 months correlation between IGO and Industrias is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Industrias Penoles Sab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrias Penoles Sab and IGO 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 IGO Limited are associated (or correlated) with Industrias Penoles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrias Penoles Sab has no effect on the direction of IGO i.e., IGO and Industrias Penoles go up and down completely randomly.

Pair Corralation between IGO and Industrias Penoles

Assuming the 90 days horizon IGO Limited is expected to under-perform the Industrias Penoles. But the pink sheet apears to be less risky and, when comparing its historical volatility, IGO Limited is 1.75 times less risky than Industrias Penoles. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Industrias Penoles Sab is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,250  in Industrias Penoles Sab on December 29, 2024 and sell it today you would earn a total of  520.00  from holding Industrias Penoles Sab or generate 41.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.16%
Values	Daily Returns

IGO Limited  vs.  Industrias Penoles Sab

IGO Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days IGO Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Industrias Penoles Sab

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrias Penoles Sab are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Industrias Penoles reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IGO and Industrias Penoles

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

The idea behind IGO Limited and Industrias Penoles Sab 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.