Correlation Between Crane and Grupo Aeroportuario

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

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

Diversification Opportunities for Crane and Grupo Aeroportuario

0.16

Correlation Coefficient

Crane  Grupo Aeroportuario

Average diversification

The 3 months correlation between Crane and Grupo is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Grupo Aeroportuario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeroportuario del and Crane 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 Crane Company are associated (or correlated) with Grupo Aeroportuario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeroportuario del has no effect on the direction of Crane i.e., Crane and Grupo Aeroportuario go up and down completely randomly.

Pair Corralation between Crane and Grupo Aeroportuario

Allowing for the 90-day total investment horizon Crane Company is expected to generate 0.86 times more return on investment than Grupo Aeroportuario. However, Crane Company is 1.17 times less risky than Grupo Aeroportuario. It trades about 0.1 of its potential returns per unit of risk. Grupo Aeroportuario del is currently generating about 0.01 per unit of risk. If you would invest  7,117  in Crane Company on November 28, 2024 and sell it today you would earn a total of  9,281  from holding Crane Company or generate 130.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.17%
Values	Daily Returns

Crane Company  vs.  Grupo Aeroportuario del

Crane Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crane Company has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Grupo Aeroportuario del

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aeroportuario del are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Grupo Aeroportuario is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Crane and Grupo Aeroportuario

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

The idea behind Crane Company and Grupo Aeroportuario del 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.