Correlation Between Grupo Gigante and Genomma Lab

Can any of the company-specific risk be diversified away by investing in both Grupo Gigante and Genomma Lab 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 Genomma Lab 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 Genomma Lab Internacional, you can compare the effects of market volatilities on Grupo Gigante and Genomma Lab 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 Genomma Lab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Gigante and Genomma Lab.

Diversification Opportunities for Grupo Gigante and Genomma Lab

0.16

Correlation Coefficient

Grupo Gigante  Genomma Lab

Average diversification

The 3 months correlation between Grupo and Genomma is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Gigante S and Genomma Lab Internacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genomma Lab Internacional 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 Genomma Lab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genomma Lab Internacional has no effect on the direction of Grupo Gigante i.e., Grupo Gigante and Genomma Lab go up and down completely randomly.

Pair Corralation between Grupo Gigante and Genomma Lab

Assuming the 90 days trading horizon Grupo Gigante is expected to generate 5.23 times less return on investment than Genomma Lab. But when comparing it to its historical volatility, Grupo Gigante S is 1.71 times less risky than Genomma Lab. It trades about 0.01 of its potential returns per unit of risk. Genomma Lab Internacional is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,514  in Genomma Lab Internacional on December 29, 2024 and sell it today you would earn a total of  26.00  from holding Genomma Lab Internacional or generate 1.03% return on investment over 90 days.

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

Grupo Gigante S  vs.  Genomma Lab Internacional

Grupo Gigante S

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grupo Gigante S has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Genomma Lab Internacional

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genomma Lab Internacional are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Genomma Lab 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 Gigante and Genomma Lab

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

The idea behind Grupo Gigante S and Genomma Lab Internacional 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.