Correlation Between Grupo Carso and TRAINLINE PLC

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

By analyzing existing cross correlation between Grupo Carso SAB and TRAINLINE PLC LS, you can compare the effects of market volatilities on Grupo Carso and TRAINLINE PLC 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 Grupo Carso with a short position of TRAINLINE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Carso and TRAINLINE PLC.

Diversification Opportunities for Grupo Carso and TRAINLINE PLC

0.04

Correlation Coefficient

Grupo Carso  TRAINLINE PLC

Significant diversification

The 3 months correlation between Grupo and TRAINLINE is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and TRAINLINE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAINLINE PLC LS and Grupo Carso 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 Grupo Carso SAB are associated (or correlated) with TRAINLINE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAINLINE PLC LS has no effect on the direction of Grupo Carso i.e., Grupo Carso and TRAINLINE PLC go up and down completely randomly.

Pair Corralation between Grupo Carso and TRAINLINE PLC

Assuming the 90 days horizon Grupo Carso SAB is expected to generate 0.53 times more return on investment than TRAINLINE PLC. However, Grupo Carso SAB is 1.9 times less risky than TRAINLINE PLC. It trades about 0.03 of its potential returns per unit of risk. TRAINLINE PLC LS is currently generating about -0.15 per unit of risk. If you would invest  520.00  in Grupo Carso SAB on December 30, 2024 and sell it today you would earn a total of  15.00  from holding Grupo Carso SAB or generate 2.88% return on investment over 90 days.

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

Grupo Carso SAB  vs.  TRAINLINE PLC LS

Grupo Carso SAB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Carso SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Grupo Carso is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

TRAINLINE PLC LS

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRAINLINE PLC LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Grupo Carso and TRAINLINE PLC

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

The idea behind Grupo Carso SAB and TRAINLINE PLC LS 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.