Correlation Between Grupo Carso and Halliburton

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

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

Diversification Opportunities for Grupo Carso and Halliburton

0.35

Correlation Coefficient

Grupo Carso  Halliburton

Weak diversification

The 3 months correlation between Grupo and Halliburton is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Grupo Carso 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 Carso SAB are associated (or correlated) with Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Grupo Carso i.e., Grupo Carso and Halliburton go up and down completely randomly.

Pair Corralation between Grupo Carso and Halliburton

Assuming the 90 days trading horizon Grupo Carso SAB is expected to under-perform the Halliburton. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Carso SAB is 1.33 times less risky than Halliburton. The stock trades about -0.03 of its potential returns per unit of risk. The Halliburton is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  60,500  in Halliburton on October 13, 2024 and sell it today you would lose (5,100) from holding Halliburton or give up 8.43% of portfolio value over 90 days.

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

Grupo Carso SAB  vs.  Halliburton

Grupo Carso SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Carso SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Halliburton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Halliburton has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Halliburton is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grupo Carso and Halliburton

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

The idea behind Grupo Carso SAB and Halliburton 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.