Correlation Between Fondo Mutuo and Salfacorp

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

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

Diversification Opportunities for Fondo Mutuo and Salfacorp

0.58

Correlation Coefficient

Fondo Mutuo  Salfacorp

Very weak diversification

The 3 months correlation between Fondo and Salfacorp is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Fondo Mutuo ETF and Salfacorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salfacorp and Fondo Mutuo 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 Fondo Mutuo ETF are associated (or correlated) with Salfacorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salfacorp has no effect on the direction of Fondo Mutuo i.e., Fondo Mutuo and Salfacorp go up and down completely randomly.

Pair Corralation between Fondo Mutuo and Salfacorp

Assuming the 90 days trading horizon Fondo Mutuo ETF is expected to generate 0.62 times more return on investment than Salfacorp. However, Fondo Mutuo ETF is 1.62 times less risky than Salfacorp. It trades about -0.09 of its potential returns per unit of risk. Salfacorp is currently generating about -0.26 per unit of risk. If you would invest  133,336  in Fondo Mutuo ETF on June 11, 2024 and sell it today you would lose (1,886) from holding Fondo Mutuo ETF or give up 1.41% of portfolio value over 90 days.

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

Fondo Mutuo ETF  vs.  Salfacorp

Fondo Mutuo ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fondo Mutuo ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Fondo Mutuo is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Salfacorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Salfacorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Fondo Mutuo and Salfacorp

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

The idea behind Fondo Mutuo ETF and Salfacorp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.