Correlation Between Nueva Expresin and AmRest Holdings

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

By analyzing existing cross correlation between Nueva Expresin Textil and AmRest Holdings SE, you can compare the effects of market volatilities on Nueva Expresin and AmRest Holdings 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 Nueva Expresin with a short position of AmRest Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nueva Expresin and AmRest Holdings.

Diversification Opportunities for Nueva Expresin and AmRest Holdings

-0.37

Correlation Coefficient

Nueva Expresin  AmRest Holdings

Very good diversification

The 3 months correlation between Nueva and AmRest is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nueva Expresin Textil and AmRest Holdings SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmRest Holdings SE and Nueva Expresin 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 Nueva Expresin Textil are associated (or correlated) with AmRest Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmRest Holdings SE has no effect on the direction of Nueva Expresin i.e., Nueva Expresin and AmRest Holdings go up and down completely randomly.

Pair Corralation between Nueva Expresin and AmRest Holdings

Assuming the 90 days trading horizon Nueva Expresin Textil is expected to under-perform the AmRest Holdings. In addition to that, Nueva Expresin is 1.16 times more volatile than AmRest Holdings SE. It trades about -0.07 of its total potential returns per unit of risk. AmRest Holdings SE is currently generating about 0.01 per unit of volatility. If you would invest  619.00  in AmRest Holdings SE on February 7, 2024 and sell it today you would lose (11.00) from holding AmRest Holdings SE or give up 1.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.47%
Values	Daily Returns

Nueva Expresin Textil  vs.  AmRest Holdings SE

Nueva Expresin Textil

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nueva Expresin Textil are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Nueva Expresin may actually be approaching a critical reversion point that can send shares even higher in June 2024.

AmRest Holdings SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AmRest Holdings SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AmRest Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nueva Expresin and AmRest Holdings

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

The idea behind Nueva Expresin Textil and AmRest Holdings SE 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.