Correlation Between FIBRA Storage and Credicorp

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

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

Diversification Opportunities for FIBRA Storage and Credicorp

0.66

Correlation Coefficient

FIBRA Storage  Credicorp

Poor diversification

The 3 months correlation between FIBRA and Credicorp is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding FIBRA Storage and Credicorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credicorp and FIBRA Storage 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 FIBRA Storage are associated (or correlated) with Credicorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credicorp has no effect on the direction of FIBRA Storage i.e., FIBRA Storage and Credicorp go up and down completely randomly.

Pair Corralation between FIBRA Storage and Credicorp

Assuming the 90 days trading horizon FIBRA Storage is expected to generate 3.82 times less return on investment than Credicorp. But when comparing it to its historical volatility, FIBRA Storage is 3.29 times less risky than Credicorp. It trades about 0.09 of its potential returns per unit of risk. Credicorp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  218,118  in Credicorp on September 23, 2024 and sell it today you would earn a total of  145,882  from holding Credicorp or generate 66.88% return on investment over 90 days.

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

FIBRA Storage  vs.  Credicorp

FIBRA Storage

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in FIBRA Storage are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, FIBRA Storage exhibited solid returns over the last few months and may actually be approaching a breakup point.

Credicorp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Credicorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Credicorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FIBRA Storage and Credicorp

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

The idea behind FIBRA Storage and Credicorp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .