Correlation Between Trigano SA and Icape Holding

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

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

Diversification Opportunities for Trigano SA and Icape Holding

-0.85

Correlation Coefficient

Trigano SA  Icape Holding

Pay attention - limited upside

The 3 months correlation between Trigano and Icape is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Trigano SA and Icape Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icape Holding and Trigano SA 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 Trigano SA are associated (or correlated) with Icape Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icape Holding has no effect on the direction of Trigano SA i.e., Trigano SA and Icape Holding go up and down completely randomly.

Pair Corralation between Trigano SA and Icape Holding

Assuming the 90 days trading horizon Trigano SA is expected to generate 1.03 times more return on investment than Icape Holding. However, Trigano SA is 1.03 times more volatile than Icape Holding. It trades about 0.1 of its potential returns per unit of risk. Icape Holding is currently generating about -0.14 per unit of risk. If you would invest  9,958  in Trigano SA on September 4, 2024 and sell it today you would earn a total of  1,512  from holding Trigano SA or generate 15.18% return on investment over 90 days.

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

Trigano SA  vs.  Icape Holding

Trigano SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trigano SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Trigano SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Icape Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icape Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Trigano SA and Icape Holding

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

The idea behind Trigano SA and Icape Holding 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.