Correlation Between Instalco Intressenter and Linea Directa

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

By analyzing existing cross correlation between Instalco Intressenter AB and Linea Directa Aseguradora, you can compare the effects of market volatilities on Instalco Intressenter and Linea Directa 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 Instalco Intressenter with a short position of Linea Directa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Instalco Intressenter and Linea Directa.

Diversification Opportunities for Instalco Intressenter and Linea Directa

-0.66

Correlation Coefficient

Instalco Intressenter  Linea Directa

Excellent diversification

The 3 months correlation between Instalco and Linea is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Instalco Intressenter AB and Linea Directa Aseguradora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linea Directa Aseguradora and Instalco Intressenter 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 Instalco Intressenter AB are associated (or correlated) with Linea Directa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linea Directa Aseguradora has no effect on the direction of Instalco Intressenter i.e., Instalco Intressenter and Linea Directa go up and down completely randomly.

Pair Corralation between Instalco Intressenter and Linea Directa

Assuming the 90 days trading horizon Instalco Intressenter AB is expected to under-perform the Linea Directa. In addition to that, Instalco Intressenter is 2.63 times more volatile than Linea Directa Aseguradora. It trades about -0.01 of its total potential returns per unit of risk. Linea Directa Aseguradora is currently generating about 0.16 per unit of volatility. If you would invest  116.00  in Linea Directa Aseguradora on April 20, 2025 and sell it today you would earn a total of  19.00  from holding Linea Directa Aseguradora or generate 16.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Instalco Intressenter AB  vs.  Linea Directa Aseguradora

Instalco Intressenter

Risk-Adjusted Performance

Very Weak

Over the last 90 days Instalco Intressenter AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Instalco Intressenter is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Linea Directa Aseguradora

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Linea Directa Aseguradora are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Linea Directa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Instalco Intressenter and Linea Directa

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

The idea behind Instalco Intressenter AB and Linea Directa Aseguradora 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.