Correlation Between Compania Minera and Corporacion Aceros

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

By analyzing existing cross correlation between Compania Minera Poderosa and Corporacion Aceros Arequipa, you can compare the effects of market volatilities on Compania Minera and Corporacion Aceros 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 Compania Minera with a short position of Corporacion Aceros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Minera and Corporacion Aceros.

Diversification Opportunities for Compania Minera and Corporacion Aceros

-0.35

Correlation Coefficient

Compania Minera  Corporacion Aceros

Very good diversification

The 3 months correlation between Compania and Corporacion is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Compania Minera Poderosa and Corporacion Aceros Arequipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion Aceros and Compania Minera 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 Compania Minera Poderosa are associated (or correlated) with Corporacion Aceros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacion Aceros has no effect on the direction of Compania Minera i.e., Compania Minera and Corporacion Aceros go up and down completely randomly.

Pair Corralation between Compania Minera and Corporacion Aceros

If you would invest  167.00  in Corporacion Aceros Arequipa on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Corporacion Aceros Arequipa or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	31.58%
Values	Daily Returns

Compania Minera Poderosa  vs.  Corporacion Aceros Arequipa

Compania Minera Poderosa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compania Minera Poderosa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Compania Minera is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Corporacion Aceros

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corporacion Aceros Arequipa has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Corporacion Aceros is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Compania Minera and Corporacion Aceros

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

The idea behind Compania Minera Poderosa and Corporacion Aceros Arequipa 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.