Correlation Between Cia De and Acerinox

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

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

Diversification Opportunities for Cia De and Acerinox

-0.05

Correlation Coefficient

Cia De  Acerinox

Good diversification

The 3 months correlation between Cia and Acerinox is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cia de Distribucion and Acerinox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acerinox and Cia De 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 Cia de Distribucion 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 Cia De i.e., Cia De and Acerinox go up and down completely randomly.

Pair Corralation between Cia De and Acerinox

Assuming the 90 days trading horizon Cia De is expected to generate 1.72 times less return on investment than Acerinox. But when comparing it to its historical volatility, Cia de Distribucion is 2.79 times less risky than Acerinox. It trades about 0.42 of its potential returns per unit of risk. Acerinox is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  855.00  in Acerinox on September 5, 2024 and sell it today you would earn a total of  99.00  from holding Acerinox or generate 11.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cia de Distribucion  vs.  Acerinox

Cia de Distribucion

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cia de Distribucion are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Cia De may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Cia De and Acerinox

The main advantage of trading using opposite Cia De and Acerinox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cia De 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 Cia de Distribucion 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.