Correlation Between Compaa Minera and Alfa SAB

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

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

Diversification Opportunities for Compaa Minera and Alfa SAB

0.04

Correlation Coefficient

Compaa Minera  Alfa SAB

Significant diversification

The 3 months correlation between Compaa and Alfa is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Compaa Minera Autln and Alfa SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa SAB de and Compaa Minera 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 Compaa Minera Autln are associated (or correlated) with Alfa SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa SAB de has no effect on the direction of Compaa Minera i.e., Compaa Minera and Alfa SAB go up and down completely randomly.

Pair Corralation between Compaa Minera and Alfa SAB

Assuming the 90 days trading horizon Compaa Minera Autln is expected to under-perform the Alfa SAB. But the stock apears to be less risky and, when comparing its historical volatility, Compaa Minera Autln is 1.02 times less risky than Alfa SAB. The stock trades about -0.06 of its potential returns per unit of risk. The Alfa SAB de is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,113  in Alfa SAB de on September 24, 2024 and sell it today you would earn a total of  433.00  from holding Alfa SAB de or generate 38.9% return on investment over 90 days.

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

Compaa Minera Autln  vs.  Alfa SAB de

Compaa Minera Autln

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alfa SAB de

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa SAB de are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Alfa SAB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Compaa Minera and Alfa SAB

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

The idea behind Compaa Minera Autln and Alfa SAB 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.