Correlation Between Ibervalles SOCIMI and Plasticos Compuestos

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

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

Diversification Opportunities for Ibervalles SOCIMI and Plasticos Compuestos

-0.3

Correlation Coefficient

Ibervalles SOCIMI  Plasticos Compuestos

Very good diversification

The 3 months correlation between Ibervalles and Plasticos is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ibervalles SOCIMI SA and Plasticos Compuestos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plasticos Compuestos and Ibervalles SOCIMI 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 Ibervalles SOCIMI SA 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 Ibervalles SOCIMI i.e., Ibervalles SOCIMI and Plasticos Compuestos go up and down completely randomly.

Pair Corralation between Ibervalles SOCIMI and Plasticos Compuestos

Assuming the 90 days trading horizon Ibervalles SOCIMI SA is expected to generate 0.49 times more return on investment than Plasticos Compuestos. However, Ibervalles SOCIMI SA is 2.04 times less risky than Plasticos Compuestos. It trades about 0.12 of its potential returns per unit of risk. Plasticos Compuestos SA is currently generating about 0.0 per unit of risk. If you would invest  565.00  in Ibervalles SOCIMI SA on September 5, 2024 and sell it today you would earn a total of  80.00  from holding Ibervalles SOCIMI SA or generate 14.16% return on investment over 90 days.

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

Ibervalles SOCIMI SA  vs.  Plasticos Compuestos SA

Ibervalles SOCIMI

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ibervalles SOCIMI SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Ibervalles SOCIMI exhibited solid returns over the last few months and may actually be approaching a breakup point.

Plasticos Compuestos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plasticos Compuestos SA has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Ibervalles SOCIMI and Plasticos Compuestos

The main advantage of trading using opposite Ibervalles SOCIMI and Plasticos Compuestos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ibervalles SOCIMI 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 Ibervalles SOCIMI SA 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.