Correlation Between Fibra UNO and FibraHotel

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

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

Diversification Opportunities for Fibra UNO and FibraHotel

-0.11

Correlation Coefficient

Fibra UNO  FibraHotel

Good diversification

The 3 months correlation between Fibra and FibraHotel is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Fibra UNO and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel and Fibra UNO 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 Fibra UNO are associated (or correlated) with FibraHotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibraHotel has no effect on the direction of Fibra UNO i.e., Fibra UNO and FibraHotel go up and down completely randomly.

Pair Corralation between Fibra UNO and FibraHotel

Assuming the 90 days trading horizon Fibra UNO is expected to generate 0.69 times more return on investment than FibraHotel. However, Fibra UNO is 1.45 times less risky than FibraHotel. It trades about -0.01 of its potential returns per unit of risk. FibraHotel is currently generating about -0.1 per unit of risk. If you would invest  2,262  in Fibra UNO on December 4, 2024 and sell it today you would lose (10.00) from holding Fibra UNO or give up 0.44% of portfolio value over 90 days.

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

Fibra UNO  vs.  FibraHotel

Fibra UNO

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fibra UNO are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Fibra UNO may actually be approaching a critical reversion point that can send shares even higher in April 2025.

FibraHotel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FibraHotel are ranked lower than 6 (%) 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.

Pair Trading with Fibra UNO and FibraHotel

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

The idea behind Fibra UNO and FibraHotel 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.