Correlation Between Testa Residencial and Laboratorio Reig

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

By analyzing existing cross correlation between Testa Residencial SOCIMI and Laboratorio Reig Jofre, you can compare the effects of market volatilities on Testa Residencial and Laboratorio Reig 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 Testa Residencial with a short position of Laboratorio Reig. Check out your portfolio center. Please also check ongoing floating volatility patterns of Testa Residencial and Laboratorio Reig.

Diversification Opportunities for Testa Residencial and Laboratorio Reig

-0.77

Correlation Coefficient

Testa Residencial  Laboratorio Reig

Pay attention - limited upside

The 3 months correlation between Testa and Laboratorio is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Testa Residencial SOCIMI and Laboratorio Reig Jofre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laboratorio Reig Jofre and Testa Residencial 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 Testa Residencial SOCIMI are associated (or correlated) with Laboratorio Reig. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laboratorio Reig Jofre has no effect on the direction of Testa Residencial i.e., Testa Residencial and Laboratorio Reig go up and down completely randomly.

Pair Corralation between Testa Residencial and Laboratorio Reig

Assuming the 90 days trading horizon Testa Residencial SOCIMI is expected to under-perform the Laboratorio Reig. But the stock apears to be less risky and, when comparing its historical volatility, Testa Residencial SOCIMI is 7.75 times less risky than Laboratorio Reig. The stock trades about -0.49 of its potential returns per unit of risk. The Laboratorio Reig Jofre is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  254.00  in Laboratorio Reig Jofre on February 7, 2024 and sell it today you would earn a total of  0.00  from holding Laboratorio Reig Jofre or generate 0.0% return on investment over 90 days.

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

Testa Residencial SOCIMI  vs.  Laboratorio Reig Jofre

Testa Residencial SOCIMI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Testa Residencial SOCIMI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Laboratorio Reig Jofre

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Laboratorio Reig Jofre are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Laboratorio Reig may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Testa Residencial and Laboratorio Reig

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

The idea behind Testa Residencial SOCIMI and Laboratorio Reig Jofre 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.