Correlation Between G Collado and Hoteles City

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

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

Diversification Opportunities for G Collado and Hoteles City

-0.41

Correlation Coefficient

G Collado  Hoteles City

Very good diversification

The 3 months correlation between COLLADO and Hoteles is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding G Collado SAB 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 G Collado 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 G Collado SAB 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 G Collado i.e., G Collado and Hoteles City go up and down completely randomly.

Pair Corralation between G Collado and Hoteles City

Assuming the 90 days trading horizon G Collado SAB is expected to generate 0.1 times more return on investment than Hoteles City. However, G Collado SAB is 9.95 times less risky than Hoteles City. It trades about 0.0 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  778.00  in G Collado SAB on September 24, 2024 and sell it today you would earn a total of  2.00  from holding G Collado SAB or generate 0.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

G Collado SAB  vs.  Hoteles City Express

G Collado SAB

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in G Collado SAB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, G Collado is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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 G Collado and Hoteles City

The main advantage of trading using opposite G Collado and Hoteles City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G Collado 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 G Collado SAB 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 Transaction History module to view history of all your transactions and understand their impact on performance.