Correlation Between Alfa SAB and Compaa Minera

Can any of the company-specific risk be diversified away by investing in both Alfa SAB and Compaa Minera 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 Alfa SAB and Compaa Minera into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alfa SAB de and Compaa Minera Autln, you can compare the effects of market volatilities on Alfa SAB and Compaa Minera 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 Alfa SAB with a short position of Compaa Minera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa SAB and Compaa Minera.

Diversification Opportunities for Alfa SAB and Compaa Minera

-0.37

Correlation Coefficient

Alfa SAB  Compaa Minera

Very good diversification

The 3 months correlation between Alfa and Compaa is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Alfa SAB de and Compaa Minera Autln in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compaa Minera Autln and Alfa SAB 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 Alfa SAB de are associated (or correlated) with Compaa Minera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compaa Minera Autln has no effect on the direction of Alfa SAB i.e., Alfa SAB and Compaa Minera go up and down completely randomly.

Pair Corralation between Alfa SAB and Compaa Minera

Assuming the 90 days trading horizon Alfa SAB de is expected to generate 0.96 times more return on investment than Compaa Minera. However, Alfa SAB de is 1.04 times less risky than Compaa Minera. It trades about 0.11 of its potential returns per unit of risk. Compaa Minera Autln is currently generating about -0.11 per unit of risk. If you would invest  1,477  in Alfa SAB de on December 28, 2024 and sell it today you would earn a total of  191.00  from holding Alfa SAB de or generate 12.93% return on investment over 90 days.

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

Alfa SAB de  vs.  Compaa Minera Autln

Alfa SAB de

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa SAB de are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Alfa SAB displayed solid returns over the last few months and may actually be approaching a breakup point.

Compaa Minera Autln

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compaa Minera Autln has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Alfa SAB and Compaa Minera

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

The idea behind Alfa SAB de and Compaa Minera Autln 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.