Correlation Between GRUPO CARSO-A1 and Canadian Utilities

Can any of the company-specific risk be diversified away by investing in both GRUPO CARSO-A1 and Canadian Utilities 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-A1 and Canadian Utilities 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 Canadian Utilities Limited, you can compare the effects of market volatilities on GRUPO CARSO-A1 and Canadian Utilities 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-A1 with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRUPO CARSO-A1 and Canadian Utilities.

Diversification Opportunities for GRUPO CARSO-A1 and Canadian Utilities

0.27

Correlation Coefficient

GRUPO CARSO-A1  Canadian Utilities

Modest diversification

The 3 months correlation between GRUPO and Canadian is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding GRUPO CARSO A1 and Canadian Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and GRUPO CARSO-A1 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 Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of GRUPO CARSO-A1 i.e., GRUPO CARSO-A1 and Canadian Utilities go up and down completely randomly.

Pair Corralation between GRUPO CARSO-A1 and Canadian Utilities

Assuming the 90 days trading horizon GRUPO CARSO A1 is expected to generate 4.27 times more return on investment than Canadian Utilities. However, GRUPO CARSO-A1 is 4.27 times more volatile than Canadian Utilities Limited. It trades about -0.04 of its potential returns per unit of risk. Canadian Utilities Limited is currently generating about -0.16 per unit of risk. If you would invest  550.00  in GRUPO CARSO A1 on October 8, 2024 and sell it today you would lose (25.00) from holding GRUPO CARSO A1 or give up 4.55% of portfolio value over 90 days.

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

GRUPO CARSO A1  vs.  Canadian Utilities Limited

GRUPO CARSO A1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRUPO CARSO A1 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GRUPO CARSO-A1 is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Canadian Utilities

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with GRUPO CARSO-A1 and Canadian Utilities

The main advantage of trading using opposite GRUPO CARSO-A1 and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GRUPO CARSO-A1 position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.

The idea behind GRUPO CARSO A1 and Canadian Utilities Limited 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.