Correlation Between Algorand and Grupo Posadas

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

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

Diversification Opportunities for Algorand and Grupo Posadas

-0.9

Correlation Coefficient

Algorand  Grupo Posadas

Pay attention - limited upside

The 3 months correlation between Algorand and Grupo is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and Grupo Posadas SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Posadas SAB and Algorand 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 Algorand are associated (or correlated) with Grupo Posadas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Posadas SAB has no effect on the direction of Algorand i.e., Algorand and Grupo Posadas go up and down completely randomly.

Pair Corralation between Algorand and Grupo Posadas

Assuming the 90 days trading horizon Algorand is expected to generate 9.3 times more return on investment than Grupo Posadas. However, Algorand is 9.3 times more volatile than Grupo Posadas SAB. It trades about 0.26 of its potential returns per unit of risk. Grupo Posadas SAB is currently generating about -0.2 per unit of risk. If you would invest  11.00  in Algorand on October 24, 2024 and sell it today you would earn a total of  31.00  from holding Algorand or generate 281.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Algorand  vs.  Grupo Posadas SAB

Algorand

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Algorand are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Algorand exhibited solid returns over the last few months and may actually be approaching a breakup point.

Grupo Posadas SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Posadas SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Algorand and Grupo Posadas

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

The idea behind Algorand and Grupo Posadas SAB 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.