Correlation Between GRUPO CARSO-A1 and Vestas Wind

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

Diversification Opportunities for GRUPO CARSO-A1 and Vestas Wind

0.29

Correlation Coefficient

GRUPO CARSO-A1  Vestas Wind

Modest diversification

The 3 months correlation between GRUPO and Vestas is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding GRUPO CARSO A1 and Vestas Wind Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestas Wind Systems 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 Vestas Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestas Wind Systems has no effect on the direction of GRUPO CARSO-A1 i.e., GRUPO CARSO-A1 and Vestas Wind go up and down completely randomly.

Pair Corralation between GRUPO CARSO-A1 and Vestas Wind

Assuming the 90 days trading horizon GRUPO CARSO A1 is expected to under-perform the Vestas Wind. In addition to that, GRUPO CARSO-A1 is 1.84 times more volatile than Vestas Wind Systems. It trades about -0.07 of its total potential returns per unit of risk. Vestas Wind Systems is currently generating about 0.08 per unit of volatility. If you would invest  1,381  in Vestas Wind Systems on October 9, 2024 and sell it today you would earn a total of  43.00  from holding Vestas Wind Systems or generate 3.11% return on investment over 90 days.

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

GRUPO CARSO A1  vs.  Vestas Wind Systems

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Vestas Wind Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vestas Wind Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with GRUPO CARSO-A1 and Vestas Wind

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

The idea behind GRUPO CARSO A1 and Vestas Wind Systems 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.