Correlation Between INFORMATION SVC and Pampa Energía

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

By analyzing existing cross correlation between INFORMATION SVC GRP and Pampa Energa SA, you can compare the effects of market volatilities on INFORMATION SVC and Pampa Energía 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 INFORMATION SVC with a short position of Pampa Energía. Check out your portfolio center. Please also check ongoing floating volatility patterns of INFORMATION SVC and Pampa Energía.

Diversification Opportunities for INFORMATION SVC and Pampa Energía

0.87

Correlation Coefficient

INFORMATION SVC  Pampa Energía

Very poor diversification

The 3 months correlation between INFORMATION and Pampa is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding INFORMATION SVC GRP and Pampa Energa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Energa SA and INFORMATION SVC 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 INFORMATION SVC GRP are associated (or correlated) with Pampa Energía. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Energa SA has no effect on the direction of INFORMATION SVC i.e., INFORMATION SVC and Pampa Energía go up and down completely randomly.

Pair Corralation between INFORMATION SVC and Pampa Energía

Assuming the 90 days horizon INFORMATION SVC is expected to generate 3.84 times less return on investment than Pampa Energía. But when comparing it to its historical volatility, INFORMATION SVC GRP is 1.32 times less risky than Pampa Energía. It trades about 0.1 of its potential returns per unit of risk. Pampa Energa SA is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  5,800  in Pampa Energa SA on October 10, 2024 and sell it today you would earn a total of  3,200  from holding Pampa Energa SA or generate 55.17% return on investment over 90 days.

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

INFORMATION SVC GRP  vs.  Pampa Energa SA

INFORMATION SVC GRP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INFORMATION SVC GRP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, INFORMATION SVC reported solid returns over the last few months and may actually be approaching a breakup point.

Pampa Energa SA

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pampa Energa SA are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Pampa Energía reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INFORMATION SVC and Pampa Energía

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

The idea behind INFORMATION SVC GRP and Pampa Energa 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.