Correlation Between Pampa Metals and Posera

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

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

Diversification Opportunities for Pampa Metals and Posera

0.36

Correlation Coefficient

Pampa Metals  Posera

Weak diversification

The 3 months correlation between Pampa and Posera is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Pampa Metals and Posera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Posera and Pampa Metals 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 Pampa Metals are associated (or correlated) with Posera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Posera has no effect on the direction of Pampa Metals i.e., Pampa Metals and Posera go up and down completely randomly.

Pair Corralation between Pampa Metals and Posera

Assuming the 90 days horizon Pampa Metals is expected to generate 0.83 times more return on investment than Posera. However, Pampa Metals is 1.21 times less risky than Posera. It trades about -0.04 of its potential returns per unit of risk. Posera is currently generating about -0.09 per unit of risk. If you would invest  25.00  in Pampa Metals on August 30, 2024 and sell it today you would lose (11.00) from holding Pampa Metals or give up 44.0% of portfolio value over 90 days.

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

Pampa Metals  vs.  Posera

Pampa Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pampa Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Pampa Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Posera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Posera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pampa Metals and Posera

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

The idea behind Pampa Metals and Posera 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.