Correlation Between CMR SAB and Hoteles City

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

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

Diversification Opportunities for CMR SAB and Hoteles City

0.08

Correlation Coefficient

CMR SAB  Hoteles City

Significant diversification

The 3 months correlation between CMR and Hoteles is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding CMR SAB de 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 CMR SAB 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 CMR SAB de 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 CMR SAB i.e., CMR SAB and Hoteles City go up and down completely randomly.

Pair Corralation between CMR SAB and Hoteles City

Assuming the 90 days trading horizon CMR SAB de is expected to under-perform the Hoteles City. In addition to that, CMR SAB is 1.3 times more volatile than Hoteles City Express. It trades about -0.05 of its total potential returns per unit of risk. Hoteles City Express is currently generating about -0.05 per unit of volatility. If you would invest  842.00  in Hoteles City Express on September 24, 2024 and sell it today you would lose (380.00) from holding Hoteles City Express or give up 45.13% of portfolio value over 90 days.

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

CMR SAB de  vs.  Hoteles City Express

CMR SAB de

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CMR SAB de are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, CMR SAB showed solid returns over the last few months and may actually be approaching a breakup point.

Hoteles City Express

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hoteles City Express are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Hoteles City may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CMR SAB and Hoteles City

The main advantage of trading using opposite CMR SAB and Hoteles City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMR SAB 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 CMR SAB de 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.