Correlation Between Inhome Prime and Mapfre

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

By analyzing existing cross correlation between Inhome Prime Properties and Mapfre, you can compare the effects of market volatilities on Inhome Prime and Mapfre 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 Inhome Prime with a short position of Mapfre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inhome Prime and Mapfre.

Diversification Opportunities for Inhome Prime and Mapfre

-0.26

Correlation Coefficient

Inhome Prime  Mapfre

Very good diversification

The 3 months correlation between Inhome and Mapfre is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Inhome Prime Properties and Mapfre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mapfre and Inhome Prime 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 Inhome Prime Properties are associated (or correlated) with Mapfre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mapfre has no effect on the direction of Inhome Prime i.e., Inhome Prime and Mapfre go up and down completely randomly.

Pair Corralation between Inhome Prime and Mapfre

Assuming the 90 days trading horizon Inhome Prime is expected to generate 2.36 times less return on investment than Mapfre. But when comparing it to its historical volatility, Inhome Prime Properties is 1.74 times less risky than Mapfre. It trades about 0.06 of its potential returns per unit of risk. Mapfre is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  167.00  in Mapfre on October 12, 2024 and sell it today you would earn a total of  88.00  from holding Mapfre or generate 52.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.88%
Values	Daily Returns

Inhome Prime Properties  vs.  Mapfre

Inhome Prime Properties

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inhome Prime Properties are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Inhome Prime exhibited solid returns over the last few months and may actually be approaching a breakup point.

Mapfre

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mapfre are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Mapfre is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Inhome Prime and Mapfre

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

The idea behind Inhome Prime Properties and Mapfre 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.