Correlation Between Guess and Industria

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

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

Diversification Opportunities for Guess and Industria

0.71

Correlation Coefficient

Guess  Industria

Poor diversification

The 3 months correlation between Guess and Industria is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Guess Inc and Industria de Diseo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industria de Diseo and Guess 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 Guess Inc are associated (or correlated) with Industria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industria de Diseo has no effect on the direction of Guess i.e., Guess and Industria go up and down completely randomly.

Pair Corralation between Guess and Industria

Considering the 90-day investment horizon Guess Inc is expected to under-perform the Industria. In addition to that, Guess is 1.25 times more volatile than Industria de Diseo. It trades about -0.01 of its total potential returns per unit of risk. Industria de Diseo is currently generating about 0.07 per unit of volatility. If you would invest  2,749  in Industria de Diseo on October 13, 2024 and sell it today you would earn a total of  2,503  from holding Industria de Diseo or generate 91.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Guess Inc  vs.  Industria de Diseo

Guess Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guess Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Industria de Diseo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industria de Diseo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Industria is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Guess and Industria

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

The idea behind Guess Inc and Industria de Diseo 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.