Correlation Between Grupo Aval and SIMCERE PHARMAC
Can any of the company-specific risk be diversified away by investing in both Grupo Aval and SIMCERE PHARMAC 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 Aval and SIMCERE PHARMAC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Aval Acciones and SIMCERE PHARMAC GRP, you can compare the effects of market volatilities on Grupo Aval and SIMCERE PHARMAC 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 Aval with a short position of SIMCERE PHARMAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aval and SIMCERE PHARMAC.
Diversification Opportunities for Grupo Aval and SIMCERE PHARMAC
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grupo and SIMCERE is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval Acciones and SIMCERE PHARMAC GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMCERE PHARMAC GRP and Grupo Aval 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 Aval Acciones are associated (or correlated) with SIMCERE PHARMAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMCERE PHARMAC GRP has no effect on the direction of Grupo Aval i.e., Grupo Aval and SIMCERE PHARMAC go up and down completely randomly.
Pair Corralation between Grupo Aval and SIMCERE PHARMAC
Assuming the 90 days trading horizon Grupo Aval Acciones is expected to generate 1.1 times more return on investment than SIMCERE PHARMAC. However, Grupo Aval is 1.1 times more volatile than SIMCERE PHARMAC GRP. It trades about 0.11 of its potential returns per unit of risk. SIMCERE PHARMAC GRP is currently generating about -0.15 per unit of risk. If you would invest 199.00 in Grupo Aval Acciones on October 15, 2024 and sell it today you would earn a total of 5.00 from holding Grupo Aval Acciones or generate 2.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Grupo Aval Acciones vs. SIMCERE PHARMAC GRP
Performance |
Timeline |
Grupo Aval Acciones |
SIMCERE PHARMAC GRP |
Grupo Aval and SIMCERE PHARMAC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Grupo Aval and SIMCERE PHARMAC
The main advantage of trading using opposite Grupo Aval and SIMCERE PHARMAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aval position performs unexpectedly, SIMCERE PHARMAC 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 SIMCERE PHARMAC will offset losses from the drop in SIMCERE PHARMAC's long position.Grupo Aval vs. MCEWEN MINING INC | Grupo Aval vs. MOVIE GAMES SA | Grupo Aval vs. USWE SPORTS AB | Grupo Aval vs. UNIVERSAL MUSIC GROUP |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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