Correlation Between Scotiabank Peru and Pesquera Exalmar

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

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

Diversification Opportunities for Scotiabank Peru and Pesquera Exalmar

-0.76

Correlation Coefficient

Scotiabank Peru  Pesquera Exalmar

Pay attention - limited upside

The 3 months correlation between Scotiabank and Pesquera is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Scotiabank Peru SAA and Pesquera Exalmar SAA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pesquera Exalmar SAA and Scotiabank Peru 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 Scotiabank Peru SAA are associated (or correlated) with Pesquera Exalmar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pesquera Exalmar SAA has no effect on the direction of Scotiabank Peru i.e., Scotiabank Peru and Pesquera Exalmar go up and down completely randomly.

Pair Corralation between Scotiabank Peru and Pesquera Exalmar

Assuming the 90 days trading horizon Scotiabank Peru SAA is expected to generate 0.67 times more return on investment than Pesquera Exalmar. However, Scotiabank Peru SAA is 1.49 times less risky than Pesquera Exalmar. It trades about 0.25 of its potential returns per unit of risk. Pesquera Exalmar SAA is currently generating about -0.13 per unit of risk. If you would invest  1,030  in Scotiabank Peru SAA on October 26, 2024 and sell it today you would earn a total of  70.00  from holding Scotiabank Peru SAA or generate 6.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	66.67%
Values	Daily Returns

Scotiabank Peru SAA  vs.  Pesquera Exalmar SAA

Scotiabank Peru SAA

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Scotiabank Peru SAA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady basic indicators, Scotiabank Peru exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pesquera Exalmar SAA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pesquera Exalmar SAA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Scotiabank Peru and Pesquera Exalmar

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

The idea behind Scotiabank Peru SAA and Pesquera Exalmar SAA 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..