Correlation Between Empresa Distribuidora and Celestica

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

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

Diversification Opportunities for Empresa Distribuidora and Celestica

0.9

Correlation Coefficient

Empresa Distribuidora  Celestica

Almost no diversification

The 3 months correlation between Empresa and Celestica is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Empresa Distribuidora y and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica and Empresa Distribuidora 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 Empresa Distribuidora y are associated (or correlated) with Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Empresa Distribuidora i.e., Empresa Distribuidora and Celestica go up and down completely randomly.

Pair Corralation between Empresa Distribuidora and Celestica

Considering the 90-day investment horizon Empresa Distribuidora y is expected to generate 1.08 times more return on investment than Celestica. However, Empresa Distribuidora is 1.08 times more volatile than Celestica. It trades about 0.52 of its potential returns per unit of risk. Celestica is currently generating about 0.25 per unit of risk. If you would invest  3,347  in Empresa Distribuidora y on September 14, 2024 and sell it today you would earn a total of  1,494  from holding Empresa Distribuidora y or generate 44.64% return on investment over 90 days.

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

Empresa Distribuidora y  vs.  Celestica

Empresa Distribuidora

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Empresa Distribuidora y are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Empresa Distribuidora displayed solid returns over the last few months and may actually be approaching a breakup point.

Celestica

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Empresa Distribuidora and Celestica

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

The idea behind Empresa Distribuidora y and Celestica 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.