Correlation Between Alsea SAB and El Puerto

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

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

Diversification Opportunities for Alsea SAB and El Puerto

0.9

Correlation Coefficient

Alsea SAB  El Puerto

Almost no diversification

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

Pair Corralation between Alsea SAB and El Puerto

Assuming the 90 days trading horizon Alsea SAB de is expected to under-perform the El Puerto. In addition to that, Alsea SAB is 1.9 times more volatile than El Puerto de. It trades about -0.13 of its total potential returns per unit of risk. El Puerto de is currently generating about -0.07 per unit of volatility. If you would invest  10,560  in El Puerto de on October 26, 2024 and sell it today you would lose (539.00) from holding El Puerto de or give up 5.1% of portfolio value over 90 days.

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

Alsea SAB de  vs.  El Puerto de

Alsea SAB de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alsea SAB de 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 primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

El Puerto de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days El Puerto de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, El Puerto is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Alsea SAB and El Puerto

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

The idea behind Alsea SAB de and El Puerto de 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..