Correlation Between Prosegur Cash and Acerinox

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

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

Diversification Opportunities for Prosegur Cash and Acerinox

0.22

Correlation Coefficient

Prosegur Cash  Acerinox

Modest diversification

The 3 months correlation between Prosegur and Acerinox is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Prosegur Cash SA and Acerinox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acerinox and Prosegur Cash 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 Prosegur Cash SA are associated (or correlated) with Acerinox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acerinox has no effect on the direction of Prosegur Cash i.e., Prosegur Cash and Acerinox go up and down completely randomly.

Pair Corralation between Prosegur Cash and Acerinox

Assuming the 90 days trading horizon Prosegur Cash is expected to generate 1.1 times less return on investment than Acerinox. But when comparing it to its historical volatility, Prosegur Cash SA is 1.11 times less risky than Acerinox. It trades about 0.05 of its potential returns per unit of risk. Acerinox is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  916.00  in Acerinox on September 5, 2024 and sell it today you would earn a total of  38.00  from holding Acerinox or generate 4.15% return on investment over 90 days.

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

Prosegur Cash SA  vs.  Acerinox

Prosegur Cash SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Prosegur Cash SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Prosegur Cash is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Acerinox

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Acerinox are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Acerinox is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Prosegur Cash and Acerinox

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

The idea behind Prosegur Cash SA and Acerinox 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.