Correlation Between Duro Felguera and Distribuidora Internacional

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

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

Diversification Opportunities for Duro Felguera and Distribuidora Internacional

0.22

Correlation Coefficient

Duro Felguera  Distribuidora Internacional

Modest diversification

The 3 months correlation between Duro and Distribuidora is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Duro Felguera and Distribuidora Internacional de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distribuidora Internacional and Duro Felguera 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 Duro Felguera are associated (or correlated) with Distribuidora Internacional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distribuidora Internacional has no effect on the direction of Duro Felguera i.e., Duro Felguera and Distribuidora Internacional go up and down completely randomly.

Pair Corralation between Duro Felguera and Distribuidora Internacional

Assuming the 90 days trading horizon Duro Felguera is expected to generate 1.02 times less return on investment than Distribuidora Internacional. In addition to that, Duro Felguera is 2.54 times more volatile than Distribuidora Internacional de. It trades about 0.06 of its total potential returns per unit of risk. Distribuidora Internacional de is currently generating about 0.15 per unit of volatility. If you would invest  1,660  in Distribuidora Internacional de on December 22, 2024 and sell it today you would earn a total of  480.00  from holding Distribuidora Internacional de or generate 28.92% return on investment over 90 days.

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

Duro Felguera  vs.  Distribuidora Internacional de

Duro Felguera

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Duro Felguera are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Duro Felguera exhibited solid returns over the last few months and may actually be approaching a breakup point.

Distribuidora Internacional

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Distribuidora Internacional de are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Distribuidora Internacional exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Duro Felguera and Distribuidora Internacional

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

The idea behind Duro Felguera and Distribuidora Internacional 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.