Correlation Between Tubacex SA and Tubos Reunidos

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

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

Diversification Opportunities for Tubacex SA and Tubos Reunidos

0.8

Correlation Coefficient

Tubacex SA  Tubos Reunidos

Very poor diversification

The 3 months correlation between Tubacex and Tubos is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Tubacex SA and Tubos Reunidos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tubos Reunidos SA and Tubacex SA 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 Tubacex SA are associated (or correlated) with Tubos Reunidos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tubos Reunidos SA has no effect on the direction of Tubacex SA i.e., Tubacex SA and Tubos Reunidos go up and down completely randomly.

Pair Corralation between Tubacex SA and Tubos Reunidos

Assuming the 90 days trading horizon Tubacex SA is expected to generate 2.0 times less return on investment than Tubos Reunidos. But when comparing it to its historical volatility, Tubacex SA is 1.77 times less risky than Tubos Reunidos. It trades about 0.13 of its potential returns per unit of risk. Tubos Reunidos SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  49.00  in Tubos Reunidos SA on December 30, 2024 and sell it today you would earn a total of  18.00  from holding Tubos Reunidos SA or generate 36.73% return on investment over 90 days.

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

Tubacex SA  vs.  Tubos Reunidos SA

Tubacex SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tubacex SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Tubacex SA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tubos Reunidos SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tubos Reunidos SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Tubos Reunidos exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tubacex SA and Tubos Reunidos

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

The idea behind Tubacex SA and Tubos Reunidos SA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.