Correlation Between City Developments and IRSA Inversiones
Can any of the company-specific risk be diversified away by investing in both City Developments and IRSA Inversiones 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 City Developments and IRSA Inversiones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Developments Limited and IRSA Inversiones Y, you can compare the effects of market volatilities on City Developments and IRSA Inversiones 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 City Developments with a short position of IRSA Inversiones. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Developments and IRSA Inversiones.
Diversification Opportunities for City Developments and IRSA Inversiones
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between City and IRSA is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding City Developments Limited and IRSA Inversiones Y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRSA Inversiones Y and City Developments 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 City Developments Limited are associated (or correlated) with IRSA Inversiones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRSA Inversiones Y has no effect on the direction of City Developments i.e., City Developments and IRSA Inversiones go up and down completely randomly.
Pair Corralation between City Developments and IRSA Inversiones
Assuming the 90 days horizon City Developments Limited is expected to under-perform the IRSA Inversiones. But the pink sheet apears to be less risky and, when comparing its historical volatility, City Developments Limited is 2.16 times less risky than IRSA Inversiones. The pink sheet trades about -0.03 of its potential returns per unit of risk. The IRSA Inversiones Y is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 366.00 in IRSA Inversiones Y on January 24, 2024 and sell it today you would earn a total of 623.00 from holding IRSA Inversiones Y or generate 170.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.86% |
| Values | Daily Returns |
City Developments Limited vs. IRSA Inversiones Y
Performance |
| Timeline |
| City Developments |
| IRSA Inversiones Y |
City Developments and IRSA Inversiones Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Developments and IRSA Inversiones
The main advantage of trading using opposite City Developments and IRSA Inversiones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Developments position performs unexpectedly, IRSA Inversiones 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 IRSA Inversiones will offset losses from the drop in IRSA Inversiones' long position.The idea behind City Developments Limited and IRSA Inversiones Y 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.| IRSA Inversiones vs. Investcorp Credit Management | IRSA Inversiones vs. Medalist Diversified Reit | IRSA Inversiones vs. Mingzhu Logistics HoldingsLtd | IRSA Inversiones vs. Aquagold International |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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