Correlation Between KAUFMAN ET and Grupo Aval

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

By analyzing existing cross correlation between KAUFMAN ET BROAD and Grupo Aval Acciones, you can compare the effects of market volatilities on KAUFMAN ET and Grupo Aval 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 KAUFMAN ET with a short position of Grupo Aval. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and Grupo Aval.

Diversification Opportunities for KAUFMAN ET and Grupo Aval

-0.44

Correlation Coefficient

KAUFMAN ET  Grupo Aval

Very good diversification

The 3 months correlation between KAUFMAN and Grupo is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD and Grupo Aval Acciones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aval Acciones and KAUFMAN ET 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 KAUFMAN ET BROAD are associated (or correlated) with Grupo Aval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aval Acciones has no effect on the direction of KAUFMAN ET i.e., KAUFMAN ET and Grupo Aval go up and down completely randomly.

Pair Corralation between KAUFMAN ET and Grupo Aval

Assuming the 90 days trading horizon KAUFMAN ET is expected to generate 6.47 times less return on investment than Grupo Aval. In addition to that, KAUFMAN ET is 1.3 times more volatile than Grupo Aval Acciones. It trades about 0.02 of its total potential returns per unit of risk. Grupo Aval Acciones is currently generating about 0.15 per unit of volatility. If you would invest  172.00  in Grupo Aval Acciones on September 17, 2024 and sell it today you would earn a total of  24.00  from holding Grupo Aval Acciones or generate 13.95% return on investment over 90 days.

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

KAUFMAN ET BROAD  vs.  Grupo Aval Acciones

KAUFMAN ET BROAD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KAUFMAN ET BROAD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, KAUFMAN ET is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Grupo Aval Acciones

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with KAUFMAN ET and Grupo Aval

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

The idea behind KAUFMAN ET BROAD and Grupo Aval Acciones 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.