Correlation Between Auto Trader and Grupo Aeroportuario

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

By analyzing existing cross correlation between Auto Trader Group and Grupo Aeroportuario del, you can compare the effects of market volatilities on Auto Trader and Grupo Aeroportuario 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 Auto Trader with a short position of Grupo Aeroportuario. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Grupo Aeroportuario.

Diversification Opportunities for Auto Trader and Grupo Aeroportuario

0.0

Correlation Coefficient

Auto Trader  Grupo Aeroportuario

Pay attention - limited upside

The 3 months correlation between Auto and Grupo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Grupo Aeroportuario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeroportuario del and Auto Trader 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 Auto Trader Group are associated (or correlated) with Grupo Aeroportuario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeroportuario del has no effect on the direction of Auto Trader i.e., Auto Trader and Grupo Aeroportuario go up and down completely randomly.

Pair Corralation between Auto Trader and Grupo Aeroportuario

If you would invest (100.00) in Grupo Aeroportuario del on September 15, 2024 and sell it today you would earn a total of  100.00  from holding Grupo Aeroportuario del or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Auto Trader Group  vs.  Grupo Aeroportuario del

Auto Trader Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Grupo Aeroportuario del

Risk-Adjusted Performance

10 of 100

Good

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

Pair Trading with Auto Trader and Grupo Aeroportuario

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

The idea behind Auto Trader Group and Grupo Aeroportuario del 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 Stocks Directory module to find actively traded stocks across global markets.