Correlation Between ALPEK SAB and Vodafone Group

Can any of the company-specific risk be diversified away by investing in both ALPEK SAB and Vodafone Group 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 Vodafone Group 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 Vodafone Group Plc, you can compare the effects of market volatilities on ALPEK SAB and Vodafone Group 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 Vodafone Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALPEK SAB and Vodafone Group.

Diversification Opportunities for ALPEK SAB and Vodafone Group

-0.5

Correlation Coefficient

ALPEK SAB  Vodafone Group

Very good diversification

The 3 months correlation between ALPEK and Vodafone is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ALPEK SAB de and Vodafone Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodafone Group Plc 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 Vodafone Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodafone Group Plc has no effect on the direction of ALPEK SAB i.e., ALPEK SAB and Vodafone Group go up and down completely randomly.

Pair Corralation between ALPEK SAB and Vodafone Group

Assuming the 90 days trading horizon ALPEK SAB de is expected to under-perform the Vodafone Group. In addition to that, ALPEK SAB is 1.77 times more volatile than Vodafone Group Plc. It trades about -0.04 of its total potential returns per unit of risk. Vodafone Group Plc is currently generating about 0.01 per unit of volatility. If you would invest  16,791  in Vodafone Group Plc on September 25, 2024 and sell it today you would lose (91.00) from holding Vodafone Group Plc or give up 0.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

ALPEK SAB de  vs.  Vodafone Group Plc

ALPEK SAB de

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ALPEK SAB de are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ALPEK SAB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vodafone Group Plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ALPEK SAB and Vodafone Group

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

The idea behind ALPEK SAB de and Vodafone Group Plc 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.