Correlation Between Fiplasto and Carboclor

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

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

Diversification Opportunities for Fiplasto and Carboclor

0.67

Correlation Coefficient

Fiplasto  Carboclor

Poor diversification

The 3 months correlation between Fiplasto and Carboclor is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fiplasto SA and Carboclor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carboclor and Fiplasto 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 Fiplasto SA are associated (or correlated) with Carboclor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carboclor has no effect on the direction of Fiplasto i.e., Fiplasto and Carboclor go up and down completely randomly.

Pair Corralation between Fiplasto and Carboclor

Assuming the 90 days trading horizon Fiplasto SA is expected to generate 0.82 times more return on investment than Carboclor. However, Fiplasto SA is 1.22 times less risky than Carboclor. It trades about 0.14 of its potential returns per unit of risk. Carboclor is currently generating about 0.09 per unit of risk. If you would invest  31,200  in Fiplasto SA on September 22, 2024 and sell it today you would earn a total of  6,250  from holding Fiplasto SA or generate 20.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Fiplasto SA  vs.  Carboclor

Fiplasto SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fiplasto SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fiplasto sustained solid returns over the last few months and may actually be approaching a breakup point.

Carboclor

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Fiplasto and Carboclor

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

The idea behind Fiplasto SA and Carboclor 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.