Correlation Between All Iron and Plasticos Compuestos

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

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

Diversification Opportunities for All Iron and Plasticos Compuestos

0.04

Correlation Coefficient

All Iron  Plasticos Compuestos

Significant diversification

The 3 months correlation between All and Plasticos is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding All Iron Re and Plasticos Compuestos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plasticos Compuestos and All Iron 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 All Iron Re are associated (or correlated) with Plasticos Compuestos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plasticos Compuestos has no effect on the direction of All Iron i.e., All Iron and Plasticos Compuestos go up and down completely randomly.

Pair Corralation between All Iron and Plasticos Compuestos

Assuming the 90 days trading horizon All Iron Re is expected to under-perform the Plasticos Compuestos. In addition to that, All Iron is 1.43 times more volatile than Plasticos Compuestos SA. It trades about -0.09 of its total potential returns per unit of risk. Plasticos Compuestos SA is currently generating about 0.32 per unit of volatility. If you would invest  97.00  in Plasticos Compuestos SA on September 17, 2024 and sell it today you would earn a total of  8.00  from holding Plasticos Compuestos SA or generate 8.25% return on investment over 90 days.

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

All Iron Re  vs.  Plasticos Compuestos SA

All Iron Re

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in All Iron Re are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, All Iron may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Plasticos Compuestos

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Plasticos Compuestos SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Plasticos Compuestos is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with All Iron and Plasticos Compuestos

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

The idea behind All Iron Re and Plasticos Compuestos 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.