Correlation Between SFL and Corporacin Inmobiliaria

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

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

Diversification Opportunities for SFL and Corporacin Inmobiliaria

0.64

Correlation Coefficient

SFL  Corporacin Inmobiliaria

Poor diversification

The 3 months correlation between SFL and Corporacin is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SFL Corp. and Corporacin Inmobiliaria Vesta, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacin Inmobiliaria and SFL 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 SFL Corporation are associated (or correlated) with Corporacin Inmobiliaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacin Inmobiliaria has no effect on the direction of SFL i.e., SFL and Corporacin Inmobiliaria go up and down completely randomly.

Pair Corralation between SFL and Corporacin Inmobiliaria

Considering the 90-day investment horizon SFL Corporation is expected to under-perform the Corporacin Inmobiliaria. But the stock apears to be less risky and, when comparing its historical volatility, SFL Corporation is 1.38 times less risky than Corporacin Inmobiliaria. The stock trades about -0.14 of its potential returns per unit of risk. The Corporacin Inmobiliaria Vesta, is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,676  in Corporacin Inmobiliaria Vesta, on September 28, 2024 and sell it today you would lose (55.00) from holding Corporacin Inmobiliaria Vesta, or give up 2.06% of portfolio value over 90 days.

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

SFL Corp.  vs.  Corporacin Inmobiliaria Vesta,

SFL Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SFL Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Corporacin Inmobiliaria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corporacin Inmobiliaria Vesta, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Corporacin Inmobiliaria is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SFL and Corporacin Inmobiliaria

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

The idea behind SFL Corporation and Corporacin Inmobiliaria Vesta, 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.