Correlation Between GRUPO CARSO and Wolters Kluwers

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

Diversification Opportunities for GRUPO CARSO and Wolters Kluwers

0.04

Correlation Coefficient

GRUPO CARSO  Wolters Kluwers

Significant diversification

The 3 months correlation between GRUPO and Wolters is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding GRUPO CARSO A1 and Wolters Kluwers Nv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolters Kluwers Nv 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 Wolters Kluwers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolters Kluwers Nv has no effect on the direction of GRUPO CARSO i.e., GRUPO CARSO and Wolters Kluwers go up and down completely randomly.

Pair Corralation between GRUPO CARSO and Wolters Kluwers

Assuming the 90 days trading horizon GRUPO CARSO A1 is expected to generate 2.85 times more return on investment than Wolters Kluwers. However, GRUPO CARSO is 2.85 times more volatile than Wolters Kluwers Nv. It trades about 0.06 of its potential returns per unit of risk. Wolters Kluwers Nv is currently generating about 0.09 per unit of risk. If you would invest  244.00  in GRUPO CARSO A1 on October 26, 2024 and sell it today you would earn a total of  321.00  from holding GRUPO CARSO A1 or generate 131.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.82%
Values	Daily Returns

GRUPO CARSO A1  vs.  Wolters Kluwers Nv

GRUPO CARSO A1

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GRUPO CARSO A1 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, GRUPO CARSO may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wolters Kluwers Nv

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wolters Kluwers Nv are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Wolters Kluwers is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GRUPO CARSO and Wolters Kluwers

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

The idea behind GRUPO CARSO A1 and Wolters Kluwers Nv 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.