Correlation Between Copa Holdings and Gentera SAB

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

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

Diversification Opportunities for Copa Holdings and Gentera SAB

0.13

Correlation Coefficient

Copa Holdings  Gentera SAB

Average diversification

The 3 months correlation between Copa and Gentera is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Gentera SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentera SAB de and Copa Holdings 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 Copa Holdings SA are associated (or correlated) with Gentera SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentera SAB de has no effect on the direction of Copa Holdings i.e., Copa Holdings and Gentera SAB go up and down completely randomly.

Pair Corralation between Copa Holdings and Gentera SAB

Considering the 90-day investment horizon Copa Holdings SA is expected to under-perform the Gentera SAB. But the stock apears to be less risky and, when comparing its historical volatility, Copa Holdings SA is 1.55 times less risky than Gentera SAB. The stock trades about -0.02 of its potential returns per unit of risk. The Gentera SAB de is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  120.00  in Gentera SAB de on September 12, 2024 and sell it today you would earn a total of  16.00  from holding Gentera SAB de or generate 13.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	49.43%
Values	Daily Returns

Copa Holdings SA  vs.  Gentera SAB de

Copa Holdings SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Copa Holdings SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Copa Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Gentera SAB de

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gentera SAB de are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Gentera SAB reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Copa Holdings and Gentera SAB

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

The idea behind Copa Holdings SA and Gentera SAB de 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.