Correlation Between IRSA Propiedades and Rio Tinto

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

By analyzing existing cross correlation between IRSA Propiedades Comerciales and Rio Tinto PLC, you can compare the effects of market volatilities on IRSA Propiedades and Rio Tinto 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 IRSA Propiedades with a short position of Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of IRSA Propiedades and Rio Tinto.

Diversification Opportunities for IRSA Propiedades and Rio Tinto

0.0

Correlation Coefficient

IRSA Propiedades  Rio Tinto

Pay attention - limited upside

The 3 months correlation between IRSA and Rio is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IRSA Propiedades Comerciales and Rio Tinto PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto PLC and IRSA Propiedades 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 IRSA Propiedades Comerciales are associated (or correlated) with Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto PLC has no effect on the direction of IRSA Propiedades i.e., IRSA Propiedades and Rio Tinto go up and down completely randomly.

Pair Corralation between IRSA Propiedades and Rio Tinto

If you would invest  822,221  in Rio Tinto PLC on December 19, 2024 and sell it today you would earn a total of  217,779  from holding Rio Tinto PLC or generate 26.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

IRSA Propiedades Comerciales  vs.  Rio Tinto PLC

IRSA Propiedades Com

Risk-Adjusted Performance

Very Weak

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

Rio Tinto PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rio Tinto PLC are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rio Tinto sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IRSA Propiedades and Rio Tinto

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

The idea behind IRSA Propiedades Comerciales and Rio Tinto PLC 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.