Correlation Between Patria Latin and Capitalworks Emerging

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

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

Diversification Opportunities for Patria Latin and Capitalworks Emerging

0.15

Correlation Coefficient

Patria Latin  Capitalworks Emerging

Average diversification

The 3 months correlation between Patria and Capitalworks is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Patria Latin American and Capitalworks Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitalworks Emerging and Patria Latin 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 Patria Latin American are associated (or correlated) with Capitalworks Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitalworks Emerging has no effect on the direction of Patria Latin i.e., Patria Latin and Capitalworks Emerging go up and down completely randomly.

Pair Corralation between Patria Latin and Capitalworks Emerging

If you would invest  1,160  in Patria Latin American on September 17, 2024 and sell it today you would earn a total of  3.00  from holding Patria Latin American or generate 0.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Patria Latin American  vs.  Capitalworks Emerging Markets

Patria Latin American

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Latin American are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Patria Latin is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Capitalworks Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capitalworks Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Capitalworks Emerging is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Patria Latin and Capitalworks Emerging

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

The idea behind Patria Latin American and Capitalworks Emerging Markets 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.