Correlation Between Parkland and Betterware

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

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

Diversification Opportunities for Parkland and Betterware

0.46

Correlation Coefficient

Parkland  Betterware

Very weak diversification

The 3 months correlation between Parkland and Betterware is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Parkland and Betterware de Mxico, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betterware de Mxico, and Parkland 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 Parkland are associated (or correlated) with Betterware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betterware de Mxico, has no effect on the direction of Parkland i.e., Parkland and Betterware go up and down completely randomly.

Pair Corralation between Parkland and Betterware

Assuming the 90 days horizon Parkland is expected to under-perform the Betterware. But the pink sheet apears to be less risky and, when comparing its historical volatility, Parkland is 1.28 times less risky than Betterware. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Betterware de Mxico, is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,285  in Betterware de Mxico, on September 28, 2024 and sell it today you would lose (200.00) from holding Betterware de Mxico, or give up 15.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.19%
Values	Daily Returns

Parkland  vs.  Betterware de Mxico,

Parkland

Risk-Adjusted Performance

0 of 100

Very Weak

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

Betterware de Mxico,

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Parkland and Betterware

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

The idea behind Parkland and Betterware de Mxico, 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.