Correlation Between Trajano Iberia and Hispanotels Inversiones

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

By analyzing existing cross correlation between Trajano Iberia Socimi and Hispanotels Inversiones SOCIMI, you can compare the effects of market volatilities on Trajano Iberia and Hispanotels Inversiones 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 Trajano Iberia with a short position of Hispanotels Inversiones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trajano Iberia and Hispanotels Inversiones.

Diversification Opportunities for Trajano Iberia and Hispanotels Inversiones

0.79

Correlation Coefficient

Trajano Iberia  Hispanotels Inversiones

Poor diversification

The 3 months correlation between Trajano and Hispanotels is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Trajano Iberia Socimi and Hispanotels Inversiones SOCIMI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hispanotels Inversiones and Trajano Iberia 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 Trajano Iberia Socimi are associated (or correlated) with Hispanotels Inversiones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hispanotels Inversiones has no effect on the direction of Trajano Iberia i.e., Trajano Iberia and Hispanotels Inversiones go up and down completely randomly.

Pair Corralation between Trajano Iberia and Hispanotels Inversiones

Assuming the 90 days trading horizon Trajano Iberia is expected to generate 2.03 times less return on investment than Hispanotels Inversiones. But when comparing it to its historical volatility, Trajano Iberia Socimi is 1.41 times less risky than Hispanotels Inversiones. It trades about 0.26 of its potential returns per unit of risk. Hispanotels Inversiones SOCIMI is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  700.00  in Hispanotels Inversiones SOCIMI on November 27, 2024 and sell it today you would earn a total of  45.00  from holding Hispanotels Inversiones SOCIMI or generate 6.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	73.33%
Values	Daily Returns

Trajano Iberia Socimi  vs.  Hispanotels Inversiones SOCIMI

Trajano Iberia Socimi

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Trajano Iberia Socimi are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Trajano Iberia is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Hispanotels Inversiones

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Hispanotels Inversiones SOCIMI are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Hispanotels Inversiones may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Trajano Iberia and Hispanotels Inversiones

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

The idea behind Trajano Iberia Socimi and Hispanotels Inversiones 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.