Correlation Between Palomar Holdings and Corporacion America

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

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

Diversification Opportunities for Palomar Holdings and Corporacion America

-0.54

Correlation Coefficient

Palomar Holdings  Corporacion America

Excellent diversification

The 3 months correlation between Palomar and Corporacion is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and Corporacion America Airports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion America and Palomar Holdings 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 Palomar Holdings are associated (or correlated) with Corporacion America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacion America has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and Corporacion America go up and down completely randomly.

Pair Corralation between Palomar Holdings and Corporacion America

Given the investment horizon of 90 days Palomar Holdings is expected to generate 1.09 times more return on investment than Corporacion America. However, Palomar Holdings is 1.09 times more volatile than Corporacion America Airports. It trades about 0.18 of its potential returns per unit of risk. Corporacion America Airports is currently generating about 0.01 per unit of risk. If you would invest  10,445  in Palomar Holdings on December 28, 2024 and sell it today you would earn a total of  3,215  from holding Palomar Holdings or generate 30.78% return on investment over 90 days.

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

Palomar Holdings  vs.  Corporacion America Airports

Palomar Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Palomar Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating primary indicators, Palomar Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Corporacion America

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacion America Airports are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Corporacion America is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Palomar Holdings and Corporacion America

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

The idea behind Palomar Holdings and Corporacion America Airports 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..