Correlation Between Grupo Gigante and Disney

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

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

Diversification Opportunities for Grupo Gigante and Disney

-0.35

Correlation Coefficient

Grupo Gigante  Disney

Very good diversification

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

Pair Corralation between Grupo Gigante and Disney

Assuming the 90 days trading horizon Grupo Gigante S is expected to generate 2.07 times more return on investment than Disney. However, Grupo Gigante is 2.07 times more volatile than The Walt Disney. It trades about 0.33 of its potential returns per unit of risk. The Walt Disney is currently generating about -0.09 per unit of risk. If you would invest  2,500  in Grupo Gigante S on October 10, 2024 and sell it today you would earn a total of  300.00  from holding Grupo Gigante S or generate 12.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Grupo Gigante S  vs.  The Walt Disney

Grupo Gigante S

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Gigante S are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Grupo Gigante is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Walt Disney

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Walt Disney are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Disney showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Gigante and Disney

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

The idea behind Grupo Gigante S and The Walt Disney 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.