Correlation Between Viscofan and Gestamp Automocion

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

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

Diversification Opportunities for Viscofan and Gestamp Automocion

0.0

Correlation Coefficient

Viscofan  Gestamp Automocion

Pay attention - limited upside

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

Pair Corralation between Viscofan and Gestamp Automocion

Assuming the 90 days trading horizon Viscofan is expected to generate 0.48 times more return on investment than Gestamp Automocion. However, Viscofan is 2.06 times less risky than Gestamp Automocion. It trades about 0.04 of its potential returns per unit of risk. Gestamp Automocion SA is currently generating about -0.06 per unit of risk. If you would invest  5,966  in Viscofan on September 5, 2024 and sell it today you would earn a total of  154.00  from holding Viscofan or generate 2.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Viscofan  vs.  Gestamp Automocion SA

Viscofan

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Viscofan are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Viscofan is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Gestamp Automocion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gestamp Automocion SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Viscofan and Gestamp Automocion

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

The idea behind Viscofan and Gestamp Automocion 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.