Correlation Between Plasticos Compuestos and Indra A

Can any of the company-specific risk be diversified away by investing in both Plasticos Compuestos and Indra A 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 Indra A 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 Indra A, you can compare the effects of market volatilities on Plasticos Compuestos and Indra A 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 Indra A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plasticos Compuestos and Indra A.

Diversification Opportunities for Plasticos Compuestos and Indra A

-0.6

Correlation Coefficient

Plasticos Compuestos  Indra A

Excellent diversification

The 3 months correlation between Plasticos and Indra is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Plasticos Compuestos SA and Indra A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indra A 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 Indra A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indra A has no effect on the direction of Plasticos Compuestos i.e., Plasticos Compuestos and Indra A go up and down completely randomly.

Pair Corralation between Plasticos Compuestos and Indra A

Assuming the 90 days trading horizon Plasticos Compuestos SA is expected to under-perform the Indra A. But the stock apears to be less risky and, when comparing its historical volatility, Plasticos Compuestos SA is 5.53 times less risky than Indra A. The stock trades about -0.03 of its potential returns per unit of risk. The Indra A is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,696  in Indra A on December 30, 2024 and sell it today you would earn a total of  964.00  from holding Indra A or generate 56.84% return on investment over 90 days.

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

Plasticos Compuestos SA  vs.  Indra A

Plasticos Compuestos

Risk-Adjusted Performance

Very Weak

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

Indra A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Indra A are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Indra A exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Plasticos Compuestos and Indra A

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

The idea behind Plasticos Compuestos SA and Indra A 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.