Correlation Between Re Max and IRSA Inversiones

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

By analyzing existing cross correlation between Re Max Holding and IRSA Inversiones Y, you can compare the effects of market volatilities on Re Max and IRSA Inversiones 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 Re Max with a short position of IRSA Inversiones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Re Max and IRSA Inversiones.

Diversification Opportunities for Re Max and IRSA Inversiones

0.37

Correlation Coefficient

Re Max  IRSA Inversiones

Weak diversification

The 3 months correlation between RMAX and IRSA is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Re Max Holding and IRSA Inversiones Y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRSA Inversiones Y and Re Max 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 Re Max Holding are associated (or correlated) with IRSA Inversiones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRSA Inversiones Y has no effect on the direction of Re Max i.e., Re Max and IRSA Inversiones go up and down completely randomly.

Pair Corralation between Re Max and IRSA Inversiones

Given the investment horizon of 90 days Re Max is expected to generate 2.08 times less return on investment than IRSA Inversiones. In addition to that, Re Max is 1.44 times more volatile than IRSA Inversiones Y. It trades about 0.11 of its total potential returns per unit of risk. IRSA Inversiones Y is currently generating about 0.32 per unit of volatility. If you would invest  1,024  in IRSA Inversiones Y on September 4, 2024 and sell it today you would earn a total of  677.00  from holding IRSA Inversiones Y or generate 66.11% return on investment over 90 days.

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

Re Max Holding  vs.  IRSA Inversiones Y

Re Max Holding

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Re Max Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Re Max showed solid returns over the last few months and may actually be approaching a breakup point.

IRSA Inversiones Y

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IRSA Inversiones Y are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, IRSA Inversiones unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Re Max and IRSA Inversiones

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

The idea behind Re Max Holding and IRSA Inversiones Y 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.