Correlation Between Mapfre SA and AAC TECHNOLOGHLDGADR

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Can any of the company-specific risk be diversified away by investing in both Mapfre SA and AAC TECHNOLOGHLDGADR 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 Mapfre SA and AAC TECHNOLOGHLDGADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mapfre SA and AAC TECHNOLOGHLDGADR, you can compare the effects of market volatilities on Mapfre SA and AAC TECHNOLOGHLDGADR 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 Mapfre SA with a short position of AAC TECHNOLOGHLDGADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mapfre SA and AAC TECHNOLOGHLDGADR.

Diversification Opportunities for Mapfre SA and AAC TECHNOLOGHLDGADR

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Mapfre and AAC is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Mapfre SA and AAC TECHNOLOGHLDGADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC TECHNOLOGHLDGADR and Mapfre 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 Mapfre SA are associated (or correlated) with AAC TECHNOLOGHLDGADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC TECHNOLOGHLDGADR has no effect on the direction of Mapfre SA i.e., Mapfre SA and AAC TECHNOLOGHLDGADR go up and down completely randomly.

Pair Corralation between Mapfre SA and AAC TECHNOLOGHLDGADR

Assuming the 90 days trading horizon Mapfre SA is expected to under-perform the AAC TECHNOLOGHLDGADR. But the stock apears to be less risky and, when comparing its historical volatility, Mapfre SA is 2.75 times less risky than AAC TECHNOLOGHLDGADR. The stock trades about -0.19 of its potential returns per unit of risk. The AAC TECHNOLOGHLDGADR is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  404.00  in AAC TECHNOLOGHLDGADR on September 23, 2024 and sell it today you would earn a total of  46.00  from holding AAC TECHNOLOGHLDGADR or generate 11.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Mapfre SA  vs.  AAC TECHNOLOGHLDGADR

 Performance 
       Timeline  
Mapfre SA 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Mapfre SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Mapfre SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
AAC TECHNOLOGHLDGADR 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in AAC TECHNOLOGHLDGADR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AAC TECHNOLOGHLDGADR reported solid returns over the last few months and may actually be approaching a breakup point.

Mapfre SA and AAC TECHNOLOGHLDGADR Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mapfre SA and AAC TECHNOLOGHLDGADR

The main advantage of trading using opposite Mapfre SA and AAC TECHNOLOGHLDGADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mapfre SA position performs unexpectedly, AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR will offset losses from the drop in AAC TECHNOLOGHLDGADR's long position.
The idea behind Mapfre SA and AAC TECHNOLOGHLDGADR 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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