Correlation Between Grupo Elektra and Alfa SAB

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

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

Diversification Opportunities for Grupo Elektra and Alfa SAB

-0.52

Correlation Coefficient

Grupo Elektra  Alfa SAB

Excellent diversification

The 3 months correlation between Grupo and Alfa is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Elektra SAB and Alfa SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa SAB de and Grupo Elektra 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 Grupo Elektra SAB are associated (or correlated) with Alfa SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa SAB de has no effect on the direction of Grupo Elektra i.e., Grupo Elektra and Alfa SAB go up and down completely randomly.

Pair Corralation between Grupo Elektra and Alfa SAB

Assuming the 90 days trading horizon Grupo Elektra SAB is expected to under-perform the Alfa SAB. In addition to that, Grupo Elektra is 4.59 times more volatile than Alfa SAB de. It trades about -0.07 of its total potential returns per unit of risk. Alfa SAB de is currently generating about 0.05 per unit of volatility. If you would invest  1,468  in Alfa SAB de on September 24, 2024 and sell it today you would earn a total of  78.00  from holding Alfa SAB de or generate 5.31% return on investment over 90 days.

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

Grupo Elektra SAB  vs.  Alfa SAB de

Grupo Elektra SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Elektra SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Alfa SAB de

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa SAB de are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Alfa SAB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Grupo Elektra and Alfa SAB

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

The idea behind Grupo Elektra SAB and Alfa 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.