Correlation Between Rimac Seguros and Industrias Electro

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

By analyzing existing cross correlation between Rimac Seguros y and Industrias Electro Quimicas, you can compare the effects of market volatilities on Rimac Seguros and Industrias Electro 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 Rimac Seguros with a short position of Industrias Electro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rimac Seguros and Industrias Electro.

Diversification Opportunities for Rimac Seguros and Industrias Electro

0.0

Correlation Coefficient

Rimac Seguros  Industrias Electro

Pay attention - limited upside

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

Pair Corralation between Rimac Seguros and Industrias Electro

If you would invest  70.00  in Rimac Seguros y on October 11, 2024 and sell it today you would earn a total of  27.00  from holding Rimac Seguros y or generate 38.57% return on investment over 90 days.

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

Rimac Seguros y  vs.  Industrias Electro Quimicas

Rimac Seguros y

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Rimac Seguros y has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather inconsistent technical and fundamental indicators, Rimac Seguros exhibited solid returns over the last few months and may actually be approaching a breakup point.

Industrias Electro

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Rimac Seguros and Industrias Electro

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

The idea behind Rimac Seguros y and Industrias Electro Quimicas 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.