Correlation Between AFP Provida and Compania

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

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

Diversification Opportunities for AFP Provida and Compania

0.0

Correlation Coefficient

AFP Provida  Compania

Pay attention - limited upside

The 3 months correlation between AFP and Compania is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AFP Provida and Compania De Inversiones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania De Inversiones and AFP Provida 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 AFP Provida are associated (or correlated) with Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania De Inversiones has no effect on the direction of AFP Provida i.e., AFP Provida and Compania go up and down completely randomly.

Pair Corralation between AFP Provida and Compania

If you would invest  300,000  in AFP Provida on December 29, 2024 and sell it today you would earn a total of  139,900  from holding AFP Provida or generate 46.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

AFP Provida  vs.  Compania De Inversiones

AFP Provida

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AFP Provida are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AFP Provida sustained solid returns over the last few months and may actually be approaching a breakup point.

Compania De Inversiones

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compania De Inversiones has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Compania is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with AFP Provida and Compania

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

The idea behind AFP Provida and Compania De Inversiones 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.