Correlation Between NXP Semiconductors and Pampa Energía

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

By analyzing existing cross correlation between NXP Semiconductors NV and Pampa Energa SA, you can compare the effects of market volatilities on NXP Semiconductors and Pampa Energía 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 NXP Semiconductors with a short position of Pampa Energía. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXP Semiconductors and Pampa Energía.

Diversification Opportunities for NXP Semiconductors and Pampa Energía

-0.51

Correlation Coefficient

NXP Semiconductors  Pampa Energía

Excellent diversification

The 3 months correlation between NXP and Pampa is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and Pampa Energa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Energa SA and NXP Semiconductors 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 NXP Semiconductors NV are associated (or correlated) with Pampa Energía. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Energa SA has no effect on the direction of NXP Semiconductors i.e., NXP Semiconductors and Pampa Energía go up and down completely randomly.

Pair Corralation between NXP Semiconductors and Pampa Energía

If you would invest  0.00  in Pampa Energa SA on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Pampa Energa SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.88%
Values	Daily Returns

NXP Semiconductors NV  vs.  Pampa Energa SA

NXP Semiconductors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NXP Semiconductors NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NXP Semiconductors is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pampa Energa SA

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Pampa Energa SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Pampa Energía reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NXP Semiconductors and Pampa Energía

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

The idea behind NXP Semiconductors NV and Pampa Energa 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.