Correlation Between Grupo Aval and Rogers Sugar

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

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

Diversification Opportunities for Grupo Aval and Rogers Sugar

0.14

Correlation Coefficient

Grupo Aval  Rogers Sugar

Average diversification

The 3 months correlation between Grupo and Rogers is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval and Rogers Sugar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Sugar and Grupo Aval 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 Aval are associated (or correlated) with Rogers Sugar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Sugar has no effect on the direction of Grupo Aval i.e., Grupo Aval and Rogers Sugar go up and down completely randomly.

Pair Corralation between Grupo Aval and Rogers Sugar

Given the investment horizon of 90 days Grupo Aval is expected to generate 0.48 times more return on investment than Rogers Sugar. However, Grupo Aval is 2.07 times less risky than Rogers Sugar. It trades about 0.07 of its potential returns per unit of risk. Rogers Sugar is currently generating about 0.03 per unit of risk. If you would invest  202.00  in Grupo Aval on September 4, 2024 and sell it today you would earn a total of  13.00  from holding Grupo Aval or generate 6.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Grupo Aval  vs.  Rogers Sugar

Grupo Aval

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aval are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Grupo Aval may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Rogers Sugar

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rogers Sugar are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Rogers Sugar is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Grupo Aval and Rogers Sugar

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

The idea behind Grupo Aval and Rogers Sugar 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 Transaction History module to view history of all your transactions and understand their impact on performance.