Correlation Between Aenza SAA and Comfort Systems

Can any of the company-specific risk be diversified away by investing in both Aenza SAA and Comfort Systems 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 Aenza SAA and Comfort Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aenza SAA and Comfort Systems USA, you can compare the effects of market volatilities on Aenza SAA and Comfort Systems 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 Aenza SAA with a short position of Comfort Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aenza SAA and Comfort Systems.

Diversification Opportunities for Aenza SAA and Comfort Systems

-0.75

Correlation Coefficient

Aenza SAA  Comfort Systems

Pay attention - limited upside

The 3 months correlation between Aenza and Comfort is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aenza SAA and Comfort Systems USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comfort Systems USA and Aenza SAA 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 Aenza SAA are associated (or correlated) with Comfort Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comfort Systems USA has no effect on the direction of Aenza SAA i.e., Aenza SAA and Comfort Systems go up and down completely randomly.

Pair Corralation between Aenza SAA and Comfort Systems

If you would invest  31,457  in Comfort Systems USA on September 2, 2024 and sell it today you would earn a total of  17,870  from holding Comfort Systems USA or generate 56.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Aenza SAA  vs.  Comfort Systems USA

Aenza SAA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aenza SAA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Aenza SAA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Comfort Systems USA

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Comfort Systems USA are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, Comfort Systems showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aenza SAA and Comfort Systems

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

The idea behind Aenza SAA and Comfort Systems USA 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.