Correlation Between Sanyo Special and Corporacion America

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

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

Diversification Opportunities for Sanyo Special and Corporacion America

0.5

Correlation Coefficient

Sanyo Special  Corporacion America

Very weak diversification

The 3 months correlation between Sanyo and Corporacion is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo Special Steel and Corporacion America Airports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion America and Sanyo Special 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 Sanyo Special Steel 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 Sanyo Special i.e., Sanyo Special and Corporacion America go up and down completely randomly.

Pair Corralation between Sanyo Special and Corporacion America

Assuming the 90 days horizon Sanyo Special is expected to generate 25.11 times less return on investment than Corporacion America. But when comparing it to its historical volatility, Sanyo Special Steel is 25.25 times less risky than Corporacion America. It trades about 0.13 of its potential returns per unit of risk. Corporacion America Airports is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,724  in Corporacion America Airports on September 18, 2024 and sell it today you would earn a total of  310.00  from holding Corporacion America Airports or generate 17.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Sanyo Special Steel  vs.  Corporacion America Airports

Sanyo Special Steel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sanyo Special Steel are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Sanyo Special is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Corporacion America

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacion America Airports are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Corporacion America reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sanyo Special and Corporacion America

The main advantage of trading using opposite Sanyo Special and Corporacion America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanyo Special 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 Sanyo Special Steel 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.