Correlation Between Vale SA and IRSA Propiedades

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

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

Diversification Opportunities for Vale SA and IRSA Propiedades

0.0

Correlation Coefficient

Vale SA  IRSA Propiedades

Pay attention - limited upside

The 3 months correlation between Vale and IRSA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and IRSA Propiedades Comerciales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRSA Propiedades Com and Vale 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 Vale SA are associated (or correlated) with IRSA Propiedades. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRSA Propiedades Com has no effect on the direction of Vale SA i.e., Vale SA and IRSA Propiedades go up and down completely randomly.

Pair Corralation between Vale SA and IRSA Propiedades

If you would invest  520,000  in Vale SA on December 20, 2024 and sell it today you would earn a total of  138,000  from holding Vale SA or generate 26.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Vale SA  vs.  IRSA Propiedades Comerciales

Vale SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vale SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vale SA sustained solid returns over the last few months and may actually be approaching a breakup point.

IRSA Propiedades Com

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Vale SA and IRSA Propiedades

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

The idea behind Vale SA and IRSA Propiedades Comerciales 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.