Correlation Between IM Vinaria and Mecanica

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

By analyzing existing cross correlation between IM Vinaria Purcari and Mecanica Sa Ce, you can compare the effects of market volatilities on IM Vinaria and Mecanica 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 IM Vinaria with a short position of Mecanica. Check out your portfolio center. Please also check ongoing floating volatility patterns of IM Vinaria and Mecanica.

Diversification Opportunities for IM Vinaria and Mecanica

-0.07

Correlation Coefficient

IM Vinaria  Mecanica

Good diversification

The 3 months correlation between WINE and Mecanica is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding IM Vinaria Purcari and Mecanica Sa Ce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mecanica Sa Ce and IM Vinaria 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 IM Vinaria Purcari are associated (or correlated) with Mecanica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mecanica Sa Ce has no effect on the direction of IM Vinaria i.e., IM Vinaria and Mecanica go up and down completely randomly.

Pair Corralation between IM Vinaria and Mecanica

Assuming the 90 days trading horizon IM Vinaria is expected to generate 1.75 times less return on investment than Mecanica. But when comparing it to its historical volatility, IM Vinaria Purcari is 5.17 times less risky than Mecanica. It trades about 0.06 of its potential returns per unit of risk. Mecanica Sa Ce is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Mecanica Sa Ce on December 23, 2024 and sell it today you would earn a total of  0.00  from holding Mecanica Sa Ce or generate 0.0% return on investment over 90 days.

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

IM Vinaria Purcari  vs.  Mecanica Sa Ce

IM Vinaria Purcari

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IM Vinaria Purcari are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IM Vinaria is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Mecanica Sa Ce

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mecanica Sa Ce are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Mecanica is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IM Vinaria and Mecanica

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

The idea behind IM Vinaria Purcari and Mecanica Sa Ce 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.