Correlation Between GRUPO CARSO-A1 and Volkswagen

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

Diversification Opportunities for GRUPO CARSO-A1 and Volkswagen

0.16

Correlation Coefficient

GRUPO CARSO-A1  Volkswagen

Average diversification

The 3 months correlation between GRUPO and Volkswagen is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding GRUPO CARSO A1 and Volkswagen AG VZO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG VZO 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG VZO has no effect on the direction of GRUPO CARSO-A1 i.e., GRUPO CARSO-A1 and Volkswagen go up and down completely randomly.

Pair Corralation between GRUPO CARSO-A1 and Volkswagen

Assuming the 90 days trading horizon GRUPO CARSO A1 is expected to generate 2.81 times more return on investment than Volkswagen. However, GRUPO CARSO-A1 is 2.81 times more volatile than Volkswagen AG VZO. It trades about 0.02 of its potential returns per unit of risk. Volkswagen AG VZO is currently generating about -0.02 per unit of risk. If you would invest  522.00  in GRUPO CARSO A1 on October 4, 2024 and sell it today you would lose (7.00) from holding GRUPO CARSO A1 or give up 1.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

GRUPO CARSO A1  vs.  Volkswagen AG VZO

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.

Volkswagen AG VZO

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with GRUPO CARSO-A1 and Volkswagen

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

The idea behind GRUPO CARSO A1 and Volkswagen AG VZO 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.