Correlation Between CVS Health and ALPEK SAB

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

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

Diversification Opportunities for CVS Health and ALPEK SAB

-0.07

Correlation Coefficient

CVS Health  ALPEK SAB

Good diversification

The 3 months correlation between CVS and ALPEK is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and ALPEK SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPEK SAB de and CVS Health 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 CVS Health are associated (or correlated) with ALPEK SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPEK SAB de has no effect on the direction of CVS Health i.e., CVS Health and ALPEK SAB go up and down completely randomly.

Pair Corralation between CVS Health and ALPEK SAB

Assuming the 90 days trading horizon CVS Health is expected to under-perform the ALPEK SAB. In addition to that, CVS Health is 1.99 times more volatile than ALPEK SAB de. It trades about -0.36 of its total potential returns per unit of risk. ALPEK SAB de is currently generating about -0.17 per unit of volatility. If you would invest  1,390  in ALPEK SAB de on October 9, 2024 and sell it today you would lose (63.00) from holding ALPEK SAB de or give up 4.53% of portfolio value over 90 days.

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

CVS Health  vs.  ALPEK SAB de

CVS Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVS Health 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 basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ALPEK SAB de

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALPEK SAB de are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ALPEK SAB is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CVS Health and ALPEK SAB

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

The idea behind CVS Health and ALPEK 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.