Correlation Between Dycasa SA and Polledo SA

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

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

Diversification Opportunities for Dycasa SA and Polledo SA

0.26

Correlation Coefficient

Dycasa SA  Polledo SA

Modest diversification

The 3 months correlation between Dycasa and Polledo is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dycasa SA and Polledo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polledo SA and Dycasa 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 Dycasa SA are associated (or correlated) with Polledo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polledo SA has no effect on the direction of Dycasa SA i.e., Dycasa SA and Polledo SA go up and down completely randomly.

Pair Corralation between Dycasa SA and Polledo SA

Assuming the 90 days trading horizon Dycasa SA is expected to under-perform the Polledo SA. In addition to that, Dycasa SA is 2.45 times more volatile than Polledo SA. It trades about -0.27 of its total potential returns per unit of risk. Polledo SA is currently generating about 0.15 per unit of volatility. If you would invest  44,000  in Polledo SA on February 5, 2024 and sell it today you would earn a total of  2,000  from holding Polledo SA or generate 4.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Dycasa SA  vs.  Polledo SA

Dycasa SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dycasa SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Polledo SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Polledo SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Polledo SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dycasa SA and Polledo SA

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

The idea behind Dycasa SA and Polledo SA 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.

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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.