Correlation Between Industria and ACS Actividades

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

By analyzing existing cross correlation between Industria de Diseno and ACS Actividades de, you can compare the effects of market volatilities on Industria and ACS Actividades 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 Industria with a short position of ACS Actividades. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industria and ACS Actividades.

Diversification Opportunities for Industria and ACS Actividades

0.76

Correlation Coefficient

Industria  ACS Actividades

Poor diversification

The 3 months correlation between Industria and ACS is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Industria de Diseno and ACS Actividades de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACS Actividades de and Industria 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 Industria de Diseno are associated (or correlated) with ACS Actividades. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACS Actividades de has no effect on the direction of Industria i.e., Industria and ACS Actividades go up and down completely randomly.

Pair Corralation between Industria and ACS Actividades

Assuming the 90 days trading horizon Industria de Diseno is expected to under-perform the ACS Actividades. In addition to that, Industria is 1.2 times more volatile than ACS Actividades de. It trades about -0.11 of its total potential returns per unit of risk. ACS Actividades de is currently generating about 0.2 per unit of volatility. If you would invest  4,276  in ACS Actividades de on September 13, 2024 and sell it today you would earn a total of  496.00  from holding ACS Actividades de or generate 11.6% return on investment over 90 days.

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

Industria de Diseno  vs.  ACS Actividades de

Industria de Diseno

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Industria de Diseno has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Industria is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ACS Actividades de

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ACS Actividades de are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ACS Actividades exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Industria and ACS Actividades

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

The idea behind Industria de Diseno and ACS Actividades de 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.