Correlation Between Financiera Independencia and Gentera SAB

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

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

Diversification Opportunities for Financiera Independencia and Gentera SAB

-0.38

Correlation Coefficient

Financiera Independencia  Gentera SAB

Very good diversification

The 3 months correlation between Financiera and Gentera is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Financiera Independencia SAB 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 Financiera Independencia 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 Financiera Independencia SAB 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 Financiera Independencia i.e., Financiera Independencia and Gentera SAB go up and down completely randomly.

Pair Corralation between Financiera Independencia and Gentera SAB

Assuming the 90 days trading horizon Financiera Independencia is expected to generate 30.26 times less return on investment than Gentera SAB. But when comparing it to its historical volatility, Financiera Independencia SAB is 2.01 times less risky than Gentera SAB. It trades about 0.0 of its potential returns per unit of risk. Gentera SAB de is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,915  in Gentera SAB de on October 12, 2024 and sell it today you would earn a total of  468.00  from holding Gentera SAB de or generate 24.44% return on investment over 90 days.

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

Financiera Independencia SAB  vs.  Gentera SAB de

Financiera Independencia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Financiera Independencia 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 basic indicators remain somewhat 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.

Gentera SAB de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gentera SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Gentera SAB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Financiera Independencia and Gentera SAB

The main advantage of trading using opposite Financiera Independencia and Gentera SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financiera Independencia 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 Financiera Independencia SAB 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.