Correlation Between Liberty Flour and Concepcion Industrial

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

By analyzing existing cross correlation between Liberty Flour Mills and Concepcion Industrial Corp, you can compare the effects of market volatilities on Liberty Flour and Concepcion Industrial 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 Liberty Flour with a short position of Concepcion Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Flour and Concepcion Industrial.

Diversification Opportunities for Liberty Flour and Concepcion Industrial

0.44

Correlation Coefficient

Liberty Flour  Concepcion Industrial

Very weak diversification

The 3 months correlation between Liberty and Concepcion is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Flour Mills and Concepcion Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concepcion Industrial and Liberty Flour 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 Liberty Flour Mills are associated (or correlated) with Concepcion Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concepcion Industrial has no effect on the direction of Liberty Flour i.e., Liberty Flour and Concepcion Industrial go up and down completely randomly.

Pair Corralation between Liberty Flour and Concepcion Industrial

Assuming the 90 days trading horizon Liberty Flour Mills is expected to generate 11.36 times more return on investment than Concepcion Industrial. However, Liberty Flour is 11.36 times more volatile than Concepcion Industrial Corp. It trades about 0.25 of its potential returns per unit of risk. Concepcion Industrial Corp is currently generating about 0.06 per unit of risk. If you would invest  1,400  in Liberty Flour Mills on October 6, 2024 and sell it today you would earn a total of  476.00  from holding Liberty Flour Mills or generate 34.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	73.33%
Values	Daily Returns

Liberty Flour Mills  vs.  Concepcion Industrial Corp

Liberty Flour Mills

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Flour Mills are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Liberty Flour exhibited solid returns over the last few months and may actually be approaching a breakup point.

Concepcion Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Liberty Flour and Concepcion Industrial

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

The idea behind Liberty Flour Mills and Concepcion Industrial Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.