Correlation Between GRUPO ECOENER and NEW WORLD

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

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

Diversification Opportunities for GRUPO ECOENER and NEW WORLD

-0.82

Correlation Coefficient

GRUPO ECOENER  NEW WORLD

Pay attention - limited upside

The 3 months correlation between GRUPO and NEW is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding GRUPO ECOENER EO and NEW WORLD DEVCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW WORLD DEVCO and GRUPO ECOENER 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 ECOENER EO are associated (or correlated) with NEW WORLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW WORLD DEVCO has no effect on the direction of GRUPO ECOENER i.e., GRUPO ECOENER and NEW WORLD go up and down completely randomly.

Pair Corralation between GRUPO ECOENER and NEW WORLD

Assuming the 90 days horizon GRUPO ECOENER EO is expected to generate 0.7 times more return on investment than NEW WORLD. However, GRUPO ECOENER EO is 1.43 times less risky than NEW WORLD. It trades about 0.04 of its potential returns per unit of risk. NEW WORLD DEVCO is currently generating about 0.02 per unit of risk. If you would invest  432.00  in GRUPO ECOENER EO on December 25, 2024 and sell it today you would earn a total of  16.00  from holding GRUPO ECOENER EO or generate 3.7% return on investment over 90 days.

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

GRUPO ECOENER EO  vs.  NEW WORLD DEVCO

GRUPO ECOENER EO

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GRUPO ECOENER EO are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, GRUPO ECOENER is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

NEW WORLD DEVCO

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NEW WORLD DEVCO are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, NEW WORLD is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GRUPO ECOENER and NEW WORLD

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

The idea behind GRUPO ECOENER EO and NEW WORLD DEVCO 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 Global Correlations module to find global opportunities by holding instruments from different markets.