Correlation Between Grupo Aeroportuario and Eldorado Gold

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

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

Diversification Opportunities for Grupo Aeroportuario and Eldorado Gold

0.68

Correlation Coefficient

Grupo Aeroportuario  Eldorado Gold

Poor diversification

The 3 months correlation between Grupo and Eldorado is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aeroportuario del and Eldorado Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldorado Gold Corp and Grupo Aeroportuario 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 Grupo Aeroportuario del are associated (or correlated) with Eldorado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldorado Gold Corp has no effect on the direction of Grupo Aeroportuario i.e., Grupo Aeroportuario and Eldorado Gold go up and down completely randomly.

Pair Corralation between Grupo Aeroportuario and Eldorado Gold

Considering the 90-day investment horizon Grupo Aeroportuario del is expected to under-perform the Eldorado Gold. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Aeroportuario del is 1.46 times less risky than Eldorado Gold. The stock trades about -0.01 of its potential returns per unit of risk. The Eldorado Gold Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,555  in Eldorado Gold Corp on October 10, 2024 and sell it today you would earn a total of  50.00  from holding Eldorado Gold Corp or generate 3.22% return on investment over 90 days.

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

Grupo Aeroportuario del  vs.  Eldorado Gold Corp

Grupo Aeroportuario del

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Aeroportuario del has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Grupo Aeroportuario is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Eldorado Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eldorado Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Eldorado Gold is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Grupo Aeroportuario and Eldorado Gold

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

The idea behind Grupo Aeroportuario del and Eldorado Gold Corp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.