Correlation Between Alliance Global and Grupo Financiero

Can any of the company-specific risk be diversified away by investing in both Alliance Global and Grupo Financiero 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 Alliance Global and Grupo Financiero into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alliance Global Group and Grupo Financiero Inbursa, you can compare the effects of market volatilities on Alliance Global and Grupo Financiero 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 Alliance Global with a short position of Grupo Financiero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Global and Grupo Financiero.

Diversification Opportunities for Alliance Global and Grupo Financiero

0.37

Correlation Coefficient

Alliance Global  Grupo Financiero

Weak diversification

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

Pair Corralation between Alliance Global and Grupo Financiero

Assuming the 90 days horizon Alliance Global Group is expected to generate 0.69 times more return on investment than Grupo Financiero. However, Alliance Global Group is 1.44 times less risky than Grupo Financiero. It trades about -0.1 of its potential returns per unit of risk. Grupo Financiero Inbursa is currently generating about -0.07 per unit of risk. If you would invest  807.00  in Alliance Global Group on September 5, 2024 and sell it today you would lose (71.00) from holding Alliance Global Group or give up 8.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Alliance Global Group  vs.  Grupo Financiero Inbursa

Alliance Global Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliance Global Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Grupo Financiero Inbursa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Financiero Inbursa 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.

Pair Trading with Alliance Global and Grupo Financiero

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

The idea behind Alliance Global Group and Grupo Financiero Inbursa 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.