Correlation Between FibraHotel and Nemak S

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

By analyzing existing cross correlation between FibraHotel and Nemak S A, you can compare the effects of market volatilities on FibraHotel and Nemak S 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 FibraHotel with a short position of Nemak S. Check out your portfolio center. Please also check ongoing floating volatility patterns of FibraHotel and Nemak S.

Diversification Opportunities for FibraHotel and Nemak S

0.54

Correlation Coefficient

FibraHotel  Nemak S

Very weak diversification

The 3 months correlation between FibraHotel and Nemak is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding FibraHotel and Nemak S A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nemak S A and FibraHotel 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 FibraHotel are associated (or correlated) with Nemak S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nemak S A has no effect on the direction of FibraHotel i.e., FibraHotel and Nemak S go up and down completely randomly.

Pair Corralation between FibraHotel and Nemak S

Assuming the 90 days trading horizon FibraHotel is expected to generate 0.98 times more return on investment than Nemak S. However, FibraHotel is 1.02 times less risky than Nemak S. It trades about 0.13 of its potential returns per unit of risk. Nemak S A is currently generating about 0.06 per unit of risk. If you would invest  900.00  in FibraHotel on October 8, 2024 and sell it today you would earn a total of  100.00  from holding FibraHotel or generate 11.11% return on investment over 90 days.

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

FibraHotel  vs.  Nemak S A

FibraHotel

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FibraHotel are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, FibraHotel sustained solid returns over the last few months and may actually be approaching a breakup point.

Nemak S A

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nemak S A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Nemak S sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FibraHotel and Nemak S

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

The idea behind FibraHotel and Nemak S A 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.