Correlation Between Internacional and Hoteles City

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

By analyzing existing cross correlation between Internacional de Cermica and Hoteles City Express, you can compare the effects of market volatilities on Internacional and Hoteles City 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 Internacional with a short position of Hoteles City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Internacional and Hoteles City.

Diversification Opportunities for Internacional and Hoteles City

0.0

Correlation Coefficient

Internacional  Hoteles City

Pay attention - limited upside

The 3 months correlation between Internacional and Hoteles is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Internacional de Cermica and Hoteles City Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoteles City Express and Internacional 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 Internacional de Cermica are associated (or correlated) with Hoteles City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoteles City Express has no effect on the direction of Internacional i.e., Internacional and Hoteles City go up and down completely randomly.

Pair Corralation between Internacional and Hoteles City

Assuming the 90 days trading horizon Internacional de Cermica is expected to generate 0.26 times more return on investment than Hoteles City. However, Internacional de Cermica is 3.84 times less risky than Hoteles City. It trades about 0.09 of its potential returns per unit of risk. Hoteles City Express is currently generating about -0.05 per unit of risk. If you would invest  7,604  in Internacional de Cermica on October 10, 2024 and sell it today you would earn a total of  1,996  from holding Internacional de Cermica or generate 26.25% return on investment over 90 days.

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

Internacional de Cermica  vs.  Hoteles City Express

Internacional de Cermica

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Internacional de Cermica has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Internacional is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Hoteles City Express

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hoteles City Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Internacional and Hoteles City

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

The idea behind Internacional de Cermica and Hoteles City Express 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.