Correlation Between Concepcion Industrial and Century Pacific

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

By analyzing existing cross correlation between Concepcion Industrial Corp and Century Pacific Food, you can compare the effects of market volatilities on Concepcion Industrial and Century Pacific 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 Concepcion Industrial with a short position of Century Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concepcion Industrial and Century Pacific.

Diversification Opportunities for Concepcion Industrial and Century Pacific

-0.53

Correlation Coefficient

Concepcion Industrial  Century Pacific

Excellent diversification

The 3 months correlation between Concepcion and Century is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Concepcion Industrial Corp and Century Pacific Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Pacific Food and Concepcion Industrial 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 Concepcion Industrial Corp are associated (or correlated) with Century Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Pacific Food has no effect on the direction of Concepcion Industrial i.e., Concepcion Industrial and Century Pacific go up and down completely randomly.

Pair Corralation between Concepcion Industrial and Century Pacific

Assuming the 90 days trading horizon Concepcion Industrial is expected to generate 12.76 times less return on investment than Century Pacific. But when comparing it to its historical volatility, Concepcion Industrial Corp is 1.08 times less risky than Century Pacific. It trades about 0.01 of its potential returns per unit of risk. Century Pacific Food is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,910  in Century Pacific Food on September 14, 2024 and sell it today you would earn a total of  585.00  from holding Century Pacific Food or generate 14.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Concepcion Industrial Corp  vs.  Century Pacific Food

Concepcion Industrial

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Concepcion Industrial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Concepcion Industrial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Century Pacific Food

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Century Pacific Food are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Century Pacific unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Concepcion Industrial and Century Pacific

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

The idea behind Concepcion Industrial Corp and Century Pacific Food 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.