Correlation Between Mapfre and Acerinox

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

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

Diversification Opportunities for Mapfre and Acerinox

-0.36

Correlation Coefficient

Mapfre  Acerinox

Very good diversification

The 3 months correlation between Mapfre and Acerinox is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Mapfre and Acerinox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acerinox and Mapfre 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 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 Mapfre i.e., Mapfre and Acerinox go up and down completely randomly.

Pair Corralation between Mapfre and Acerinox

Assuming the 90 days trading horizon Mapfre is expected to generate 0.7 times more return on investment than Acerinox. However, Mapfre is 1.44 times less risky than Acerinox. It trades about 0.13 of its potential returns per unit of risk. Acerinox is currently generating about 0.0 per unit of risk. If you would invest  223.00  in Mapfre on September 1, 2024 and sell it today you would earn a total of  23.00  from holding Mapfre or generate 10.31% return on investment over 90 days.

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

Mapfre  vs.  Acerinox

Mapfre

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mapfre are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Mapfre may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Acerinox

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acerinox has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Mapfre and Acerinox

The main advantage of trading using opposite Mapfre and Acerinox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mapfre 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 Mapfre 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.