Correlation Between Plasticos Compuestos and Cox ABG

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

By analyzing existing cross correlation between Plasticos Compuestos SA and Cox ABG Group, you can compare the effects of market volatilities on Plasticos Compuestos and Cox ABG 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 Plasticos Compuestos with a short position of Cox ABG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plasticos Compuestos and Cox ABG.

Diversification Opportunities for Plasticos Compuestos and Cox ABG

0.27

Correlation Coefficient

Plasticos Compuestos  Cox ABG

Modest diversification

The 3 months correlation between Plasticos and Cox is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Plasticos Compuestos SA and Cox ABG Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cox ABG Group and Plasticos Compuestos 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 Plasticos Compuestos SA are associated (or correlated) with Cox ABG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cox ABG Group has no effect on the direction of Plasticos Compuestos i.e., Plasticos Compuestos and Cox ABG go up and down completely randomly.

Pair Corralation between Plasticos Compuestos and Cox ABG

Assuming the 90 days trading horizon Plasticos Compuestos SA is expected to generate 0.59 times more return on investment than Cox ABG. However, Plasticos Compuestos SA is 1.69 times less risky than Cox ABG. It trades about 0.2 of its potential returns per unit of risk. Cox ABG Group is currently generating about 0.09 per unit of risk. If you would invest  91.00  in Plasticos Compuestos SA on October 26, 2024 and sell it today you would earn a total of  13.00  from holding Plasticos Compuestos SA or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	34.43%
Values	Daily Returns

Plasticos Compuestos SA  vs.  Cox ABG Group

Plasticos Compuestos

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plasticos Compuestos SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Plasticos Compuestos exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cox ABG Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cox ABG Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Cox ABG may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Plasticos Compuestos and Cox ABG

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

The idea behind Plasticos Compuestos SA and Cox ABG Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.