Correlation Between Nemak S and ALPEK SAB

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

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

Diversification Opportunities for Nemak S and ALPEK SAB

-0.61

Correlation Coefficient

Nemak S  ALPEK SAB

Excellent diversification

The 3 months correlation between Nemak and ALPEK is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Nemak S A and ALPEK SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPEK SAB de and Nemak S 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 Nemak S A are associated (or correlated) with ALPEK SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPEK SAB de has no effect on the direction of Nemak S i.e., Nemak S and ALPEK SAB go up and down completely randomly.

Pair Corralation between Nemak S and ALPEK SAB

Assuming the 90 days trading horizon Nemak S A is expected to under-perform the ALPEK SAB. In addition to that, Nemak S is 1.32 times more volatile than ALPEK SAB de. It trades about -0.1 of its total potential returns per unit of risk. ALPEK SAB de is currently generating about 0.15 per unit of volatility. If you would invest  1,158  in ALPEK SAB de on August 31, 2024 and sell it today you would earn a total of  216.00  from holding ALPEK SAB de or generate 18.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Nemak S A  vs.  ALPEK SAB de

Nemak S A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nemak S A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

ALPEK SAB de

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ALPEK SAB de are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ALPEK SAB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nemak S and ALPEK SAB

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

The idea behind Nemak S A and ALPEK SAB de 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.