Correlation Between 694308KB2 and Copa Holdings

Can any of the company-specific risk be diversified away by investing in both 694308KB2 and Copa Holdings 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 694308KB2 and Copa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PCG 42 01 MAR 29 and Copa Holdings SA, you can compare the effects of market volatilities on 694308KB2 and Copa Holdings 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 694308KB2 with a short position of Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of 694308KB2 and Copa Holdings.

Diversification Opportunities for 694308KB2 and Copa Holdings

0.19

Correlation Coefficient

694308KB2  Copa Holdings

Average diversification

The 3 months correlation between 694308KB2 and Copa is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding PCG 42 01 MAR 29 and Copa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copa Holdings SA and 694308KB2 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 PCG 42 01 MAR 29 are associated (or correlated) with Copa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copa Holdings SA has no effect on the direction of 694308KB2 i.e., 694308KB2 and Copa Holdings go up and down completely randomly.

Pair Corralation between 694308KB2 and Copa Holdings

Assuming the 90 days trading horizon PCG 42 01 MAR 29 is expected to generate 0.29 times more return on investment than Copa Holdings. However, PCG 42 01 MAR 29 is 3.41 times less risky than Copa Holdings. It trades about 0.03 of its potential returns per unit of risk. Copa Holdings SA is currently generating about -0.13 per unit of risk. If you would invest  9,747  in PCG 42 01 MAR 29 on October 5, 2024 and sell it today you would earn a total of  20.00  from holding PCG 42 01 MAR 29 or generate 0.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

PCG 42 01 MAR 29  vs.  Copa Holdings SA

PCG 42 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PCG 42 01 MAR 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 694308KB2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Copa Holdings SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Copa Holdings SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with 694308KB2 and Copa Holdings

The main advantage of trading using opposite 694308KB2 and Copa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 694308KB2 position performs unexpectedly, Copa Holdings 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 Copa Holdings will offset losses from the drop in Copa Holdings' long position.

The idea behind PCG 42 01 MAR 29 and Copa Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.