Correlation Between Grupo Aeroportuario and CARPENTER

Can any of the company-specific risk be diversified away by investing in both Grupo Aeroportuario and CARPENTER 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 CARPENTER 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 CARPENTER TECHNOLOGY P, you can compare the effects of market volatilities on Grupo Aeroportuario and CARPENTER 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 CARPENTER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aeroportuario and CARPENTER.

Diversification Opportunities for Grupo Aeroportuario and CARPENTER

-0.11

Correlation Coefficient

Grupo Aeroportuario  CARPENTER

Good diversification

The 3 months correlation between Grupo and CARPENTER is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aeroportuario del and CARPENTER TECHNOLOGY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARPENTER TECHNOLOGY 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 CARPENTER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARPENTER TECHNOLOGY has no effect on the direction of Grupo Aeroportuario i.e., Grupo Aeroportuario and CARPENTER go up and down completely randomly.

Pair Corralation between Grupo Aeroportuario and CARPENTER

Considering the 90-day investment horizon Grupo Aeroportuario del is expected to generate 9.23 times more return on investment than CARPENTER. However, Grupo Aeroportuario is 9.23 times more volatile than CARPENTER TECHNOLOGY P. It trades about 0.05 of its potential returns per unit of risk. CARPENTER TECHNOLOGY P is currently generating about 0.03 per unit of risk. If you would invest  25,943  in Grupo Aeroportuario del on December 30, 2024 and sell it today you would earn a total of  1,552  from holding Grupo Aeroportuario del or generate 5.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Grupo Aeroportuario del  vs.  CARPENTER TECHNOLOGY P

Grupo Aeroportuario del

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aeroportuario del are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Grupo Aeroportuario may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CARPENTER TECHNOLOGY

Risk-Adjusted Performance

Weak

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

Pair Trading with Grupo Aeroportuario and CARPENTER

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

The idea behind Grupo Aeroportuario del and CARPENTER TECHNOLOGY P 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.