Correlation Between United States and ALPEK SAB

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

By analyzing existing cross correlation between United States Steel and ALPEK SAB de, you can compare the effects of market volatilities on United States and ALPEK SAB 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 United States with a short position of ALPEK SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and ALPEK SAB.

Diversification Opportunities for United States and ALPEK SAB

0.05

Correlation Coefficient

United States  ALPEK SAB

Significant diversification

The 3 months correlation between United and ALPEK is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and ALPEK SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPEK SAB de and United States 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 United States Steel are associated (or correlated) with ALPEK SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPEK SAB de has no effect on the direction of United States i.e., United States and ALPEK SAB go up and down completely randomly.

Pair Corralation between United States and ALPEK SAB

Given the investment horizon of 90 days United States Steel is expected to generate 1.0 times more return on investment than ALPEK SAB. However, United States is 1.0 times more volatile than ALPEK SAB de. It trades about 0.16 of its potential returns per unit of risk. ALPEK SAB de is currently generating about -0.04 per unit of risk. If you would invest  63,434  in United States Steel on December 22, 2024 and sell it today you would earn a total of  19,366  from holding United States Steel or generate 30.53% return on investment over 90 days.

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

United States Steel  vs.  ALPEK SAB de

United States Steel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, United States showed solid returns over the last few months and may actually be approaching a breakup point.

ALPEK SAB de

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALPEK SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 United States and ALPEK SAB

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

The idea behind United States Steel and ALPEK SAB de 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.