Correlation Between ALPEK SAB and FibraHotel

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

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

Diversification Opportunities for ALPEK SAB and FibraHotel

0.2

Correlation Coefficient

ALPEK SAB  FibraHotel

Modest diversification

The 3 months correlation between ALPEK and FibraHotel is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ALPEK SAB de and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel and ALPEK 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 ALPEK SAB de are associated (or correlated) with FibraHotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibraHotel has no effect on the direction of ALPEK SAB i.e., ALPEK SAB and FibraHotel go up and down completely randomly.

Pair Corralation between ALPEK SAB and FibraHotel

Assuming the 90 days trading horizon ALPEK SAB de is expected to under-perform the FibraHotel. But the stock apears to be less risky and, when comparing its historical volatility, ALPEK SAB de is 3.5 times less risky than FibraHotel. The stock trades about -0.02 of its potential returns per unit of risk. The FibraHotel is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  908.00  in FibraHotel on October 14, 2024 and sell it today you would earn a total of  102.00  from holding FibraHotel or generate 11.23% return on investment over 90 days.

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

ALPEK SAB de  vs.  FibraHotel

ALPEK SAB de

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALPEK SAB de are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ALPEK SAB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

FibraHotel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FibraHotel are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, FibraHotel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALPEK SAB and FibraHotel

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

The idea behind ALPEK SAB de and FibraHotel 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.