Correlation Between Longvie SA and Fiplasto

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

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

Diversification Opportunities for Longvie SA and Fiplasto

0.08

Correlation Coefficient

Longvie SA  Fiplasto

Significant diversification

The 3 months correlation between Longvie and Fiplasto is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Longvie SA and Fiplasto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiplasto SA and Longvie SA 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 Longvie SA are associated (or correlated) with Fiplasto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiplasto SA has no effect on the direction of Longvie SA i.e., Longvie SA and Fiplasto go up and down completely randomly.

Pair Corralation between Longvie SA and Fiplasto

Assuming the 90 days trading horizon Longvie SA is expected to under-perform the Fiplasto. But the stock apears to be less risky and, when comparing its historical volatility, Longvie SA is 1.37 times less risky than Fiplasto. The stock trades about -0.23 of its potential returns per unit of risk. The Fiplasto SA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  32,800  in Fiplasto SA on October 10, 2024 and sell it today you would earn a total of  3,050  from holding Fiplasto SA or generate 9.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Longvie SA  vs.  Fiplasto SA

Longvie SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Longvie SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Fiplasto SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fiplasto SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fiplasto sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Longvie SA and Fiplasto

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

The idea behind Longvie SA and Fiplasto SA 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.