Correlation Between SFL and Corporacion America

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

By analyzing existing cross correlation between SFL Corporation and Corporacion America Airports, you can compare the effects of market volatilities on SFL and Corporacion America 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 SFL with a short position of Corporacion America. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFL and Corporacion America.

Diversification Opportunities for SFL and Corporacion America

0.61

Correlation Coefficient

SFL  Corporacion America

Poor diversification

The 3 months correlation between SFL and Corporacion is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SFL Corp. and Corporacion America Airports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion America and SFL 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 SFL Corporation are associated (or correlated) with Corporacion America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacion America has no effect on the direction of SFL i.e., SFL and Corporacion America go up and down completely randomly.

Pair Corralation between SFL and Corporacion America

Considering the 90-day investment horizon SFL Corporation is expected to under-perform the Corporacion America. But the stock apears to be less risky and, when comparing its historical volatility, SFL Corporation is 1.26 times less risky than Corporacion America. The stock trades about -0.13 of its potential returns per unit of risk. The Corporacion America Airports is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,878  in Corporacion America Airports on December 28, 2024 and sell it today you would earn a total of  3.00  from holding Corporacion America Airports or generate 0.16% return on investment over 90 days.

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

SFL Corp.  vs.  Corporacion America Airports

SFL Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days SFL Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Corporacion America

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacion America Airports are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Corporacion America is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SFL and Corporacion America

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

The idea behind SFL Corporation and Corporacion America Airports 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.