Correlation Between Capex SA and Grupo Financiero

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

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

Diversification Opportunities for Capex SA and Grupo Financiero

0.76

Correlation Coefficient

Capex SA  Grupo Financiero

Poor diversification

The 3 months correlation between Capex and Grupo is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Capex SA and Grupo Financiero Galicia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Galicia and Capex SA 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 Capex SA are associated (or correlated) with Grupo Financiero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Financiero Galicia has no effect on the direction of Capex SA i.e., Capex SA and Grupo Financiero go up and down completely randomly.

Pair Corralation between Capex SA and Grupo Financiero

Assuming the 90 days trading horizon Capex SA is expected to under-perform the Grupo Financiero. In addition to that, Capex SA is 1.13 times more volatile than Grupo Financiero Galicia. It trades about -0.12 of its total potential returns per unit of risk. Grupo Financiero Galicia is currently generating about 0.01 per unit of volatility. If you would invest  761,000  in Grupo Financiero Galicia on December 27, 2024 and sell it today you would lose (13,000) from holding Grupo Financiero Galicia or give up 1.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Capex SA  vs.  Grupo Financiero Galicia

Capex SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capex SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Grupo Financiero Galicia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grupo Financiero Galicia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Grupo Financiero is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Capex SA and Grupo Financiero

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

The idea behind Capex SA and Grupo Financiero Galicia 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.