Correlation Between GRUPO CARSO and ALEFARM BREWING

Can any of the company-specific risk be diversified away by investing in both GRUPO CARSO and ALEFARM BREWING 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 ALEFARM BREWING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GRUPO CARSO A1 and ALEFARM BREWING DK 05, you can compare the effects of market volatilities on GRUPO CARSO and ALEFARM BREWING 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 ALEFARM BREWING. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRUPO CARSO and ALEFARM BREWING.

Diversification Opportunities for GRUPO CARSO and ALEFARM BREWING

0.02

Correlation Coefficient

GRUPO CARSO  ALEFARM BREWING

Significant diversification

The 3 months correlation between GRUPO and ALEFARM is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding GRUPO CARSO A1 and ALEFARM BREWING DK 05 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALEFARM BREWING DK 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 A1 are associated (or correlated) with ALEFARM BREWING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALEFARM BREWING DK has no effect on the direction of GRUPO CARSO i.e., GRUPO CARSO and ALEFARM BREWING go up and down completely randomly.

Pair Corralation between GRUPO CARSO and ALEFARM BREWING

Assuming the 90 days trading horizon GRUPO CARSO A1 is expected to generate 1.13 times more return on investment than ALEFARM BREWING. However, GRUPO CARSO is 1.13 times more volatile than ALEFARM BREWING DK 05. It trades about 0.01 of its potential returns per unit of risk. ALEFARM BREWING DK 05 is currently generating about -0.23 per unit of risk. If you would invest  545.00  in GRUPO CARSO A1 on September 23, 2024 and sell it today you would lose (5.00) from holding GRUPO CARSO A1 or give up 0.92% of portfolio value over 90 days.

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

GRUPO CARSO A1  vs.  ALEFARM BREWING DK 05

GRUPO CARSO A1

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GRUPO CARSO A1 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GRUPO CARSO is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ALEFARM BREWING DK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALEFARM BREWING DK 05 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with GRUPO CARSO and ALEFARM BREWING

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

The idea behind GRUPO CARSO A1 and ALEFARM BREWING DK 05 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.