Correlation Between Tectonic Financial and Credicorp

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

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

Diversification Opportunities for Tectonic Financial and Credicorp

0.84

Correlation Coefficient

Tectonic Financial  Credicorp

Very poor diversification

The 3 months correlation between Tectonic and Credicorp is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Financial PR and Credicorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credicorp and Tectonic Financial 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 Tectonic Financial PR are associated (or correlated) with Credicorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credicorp has no effect on the direction of Tectonic Financial i.e., Tectonic Financial and Credicorp go up and down completely randomly.

Pair Corralation between Tectonic Financial and Credicorp

Assuming the 90 days horizon Tectonic Financial is expected to generate 4.64 times less return on investment than Credicorp. But when comparing it to its historical volatility, Tectonic Financial PR is 1.16 times less risky than Credicorp. It trades about 0.1 of its potential returns per unit of risk. Credicorp is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  19,887  in Credicorp on May 20, 2025 and sell it today you would earn a total of  5,301  from holding Credicorp or generate 26.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Tectonic Financial PR  vs.  Credicorp

Tectonic Financial

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Tectonic Financial PR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Tectonic Financial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Credicorp

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Credicorp are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Credicorp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tectonic Financial and Credicorp

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

The idea behind Tectonic Financial PR and Credicorp 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.