Correlation Between HMC SA and Salfacorp

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

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

Diversification Opportunities for HMC SA and Salfacorp

0.0

Correlation Coefficient

HMC SA  Salfacorp

Pay attention - limited upside

The 3 months correlation between HMC and Salfacorp is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HMC SA ADMINISTRADORA and Salfacorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salfacorp and HMC SA 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 HMC SA ADMINISTRADORA are associated (or correlated) with Salfacorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salfacorp has no effect on the direction of HMC SA i.e., HMC SA and Salfacorp go up and down completely randomly.

Pair Corralation between HMC SA and Salfacorp

If you would invest  82,000  in HMC SA ADMINISTRADORA on September 12, 2024 and sell it today you would earn a total of  0.00  from holding HMC SA ADMINISTRADORA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

HMC SA ADMINISTRADORA  vs.  Salfacorp

HMC SA ADMINISTRADORA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HMC SA ADMINISTRADORA has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable basic indicators, HMC SA is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Salfacorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Salfacorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Salfacorp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with HMC SA and Salfacorp

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

The idea behind HMC SA ADMINISTRADORA and Salfacorp 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.