Correlation Between WIMFARM SA and GRUPO CARSO

Can any of the company-specific risk be diversified away by investing in both WIMFARM SA and GRUPO CARSO 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 WIMFARM SA and GRUPO CARSO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WIMFARM SA EO and GRUPO CARSO A1, you can compare the effects of market volatilities on WIMFARM SA and GRUPO CARSO 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 WIMFARM SA with a short position of GRUPO CARSO. Check out your portfolio center. Please also check ongoing floating volatility patterns of WIMFARM SA and GRUPO CARSO.

Diversification Opportunities for WIMFARM SA and GRUPO CARSO

-0.13

Correlation Coefficient

WIMFARM SA  GRUPO CARSO

Good diversification

The 3 months correlation between WIMFARM and GRUPO is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding WIMFARM SA EO and GRUPO CARSO A1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRUPO CARSO A1 and WIMFARM SA 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 WIMFARM SA EO are associated (or correlated) with GRUPO CARSO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRUPO CARSO A1 has no effect on the direction of WIMFARM SA i.e., WIMFARM SA and GRUPO CARSO go up and down completely randomly.

Pair Corralation between WIMFARM SA and GRUPO CARSO

Assuming the 90 days horizon WIMFARM SA EO is expected to under-perform the GRUPO CARSO. In addition to that, WIMFARM SA is 1.19 times more volatile than GRUPO CARSO A1. It trades about -0.03 of its total potential returns per unit of risk. GRUPO CARSO A1 is currently generating about 0.05 per unit of volatility. If you would invest  515.00  in GRUPO CARSO A1 on September 12, 2024 and sell it today you would earn a total of  35.00  from holding GRUPO CARSO A1 or generate 6.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

WIMFARM SA EO  vs.  GRUPO CARSO A1

WIMFARM SA EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WIMFARM SA EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

GRUPO CARSO A1

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GRUPO CARSO A1 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GRUPO CARSO may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with WIMFARM SA and GRUPO CARSO

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

The idea behind WIMFARM SA EO and GRUPO CARSO A1 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.