Correlation Between Compania and Sociedad Comercial

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

By analyzing existing cross correlation between Compania de Transporte and Sociedad Comercial del, you can compare the effects of market volatilities on Compania and Sociedad Comercial 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 Compania with a short position of Sociedad Comercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania and Sociedad Comercial.

Diversification Opportunities for Compania and Sociedad Comercial

0.94

Correlation Coefficient

Compania  Sociedad Comercial

Almost no diversification

The 3 months correlation between Compania and Sociedad is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Transporte and Sociedad Comercial del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sociedad Comercial del and Compania 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 Compania de Transporte are associated (or correlated) with Sociedad Comercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sociedad Comercial del has no effect on the direction of Compania i.e., Compania and Sociedad Comercial go up and down completely randomly.

Pair Corralation between Compania and Sociedad Comercial

Assuming the 90 days trading horizon Compania de Transporte is expected to generate 1.07 times more return on investment than Sociedad Comercial. However, Compania is 1.07 times more volatile than Sociedad Comercial del. It trades about -0.1 of its potential returns per unit of risk. Sociedad Comercial del is currently generating about -0.12 per unit of risk. If you would invest  275,000  in Compania de Transporte on December 29, 2024 and sell it today you would lose (64,500) from holding Compania de Transporte or give up 23.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Compania de Transporte  vs.  Sociedad Comercial del

Compania de Transporte

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compania de Transporte 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 basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sociedad Comercial del

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sociedad Comercial del 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 basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Compania and Sociedad Comercial

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

The idea behind Compania de Transporte and Sociedad Comercial del 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 Commodity Directory module to find actively traded commodities issued by global exchanges.