Correlation Between Benfica and Corticeira Amorim

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

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

Diversification Opportunities for Benfica and Corticeira Amorim

0.15

Correlation Coefficient

Benfica  Corticeira Amorim

Average diversification

The 3 months correlation between Benfica and Corticeira is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Benfica and Corticeira Amorim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corticeira Amorim and Benfica 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 Benfica are associated (or correlated) with Corticeira Amorim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corticeira Amorim has no effect on the direction of Benfica i.e., Benfica and Corticeira Amorim go up and down completely randomly.

Pair Corralation between Benfica and Corticeira Amorim

Assuming the 90 days trading horizon Benfica is expected to under-perform the Corticeira Amorim. In addition to that, Benfica is 1.58 times more volatile than Corticeira Amorim. It trades about -0.01 of its total potential returns per unit of risk. Corticeira Amorim is currently generating about 0.12 per unit of volatility. If you would invest  795.00  in Corticeira Amorim on October 20, 2024 and sell it today you would earn a total of  14.00  from holding Corticeira Amorim or generate 1.76% return on investment over 90 days.

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

Benfica  vs.  Corticeira Amorim

Benfica

Risk-Adjusted Performance

0 of 100

Very Weak

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

Corticeira Amorim

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corticeira Amorim has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Benfica and Corticeira Amorim

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

The idea behind Benfica and Corticeira Amorim 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.