Correlation Between Vale SA and Techo Hogar

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

By analyzing existing cross correlation between Vale SA and Techo Hogar SOCIMI,, you can compare the effects of market volatilities on Vale SA and Techo Hogar 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 Techo Hogar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and Techo Hogar.

Diversification Opportunities for Vale SA and Techo Hogar

0.73

Correlation Coefficient

Vale SA  Techo Hogar

Poor diversification

The 3 months correlation between Vale and Techo is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and Techo Hogar SOCIMI, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techo Hogar SOCIMI, 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 Techo Hogar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techo Hogar SOCIMI, has no effect on the direction of Vale SA i.e., Vale SA and Techo Hogar go up and down completely randomly.

Pair Corralation between Vale SA and Techo Hogar

Assuming the 90 days trading horizon Vale SA is expected to generate 19.18 times more return on investment than Techo Hogar. However, Vale SA is 19.18 times more volatile than Techo Hogar SOCIMI,. It trades about 0.07 of its potential returns per unit of risk. Techo Hogar SOCIMI, is currently generating about 0.22 per unit of risk. If you would invest  847.00  in Vale SA on December 27, 2024 and sell it today you would earn a total of  108.00  from holding Vale SA or generate 12.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	68.25%
Values	Daily Returns

Vale SA  vs.  Techo Hogar SOCIMI,

Vale SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vale SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Vale SA displayed solid returns over the last few months and may actually be approaching a breakup point.

Techo Hogar SOCIMI,

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Techo Hogar SOCIMI, are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Techo Hogar is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vale SA and Techo Hogar

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

The idea behind Vale SA and Techo Hogar SOCIMI, 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 CEOs Directory module to screen CEOs from public companies around the world.