Correlation Between Grupo Financiero and Ayala

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

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

Diversification Opportunities for Grupo Financiero and Ayala

-0.52

Correlation Coefficient

Grupo Financiero  Ayala

Excellent diversification

The 3 months correlation between Grupo and Ayala is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Inbursa and Ayala in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayala and Grupo Financiero 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 Financiero Inbursa are associated (or correlated) with Ayala. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayala has no effect on the direction of Grupo Financiero i.e., Grupo Financiero and Ayala go up and down completely randomly.

Pair Corralation between Grupo Financiero and Ayala

Assuming the 90 days horizon Grupo Financiero Inbursa is expected to generate 1.17 times more return on investment than Ayala. However, Grupo Financiero is 1.17 times more volatile than Ayala. It trades about 0.0 of its potential returns per unit of risk. Ayala is currently generating about -0.13 per unit of risk. If you would invest  235.00  in Grupo Financiero Inbursa on December 25, 2024 and sell it today you would lose (6.00) from holding Grupo Financiero Inbursa or give up 2.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

Grupo Financiero Inbursa  vs.  Ayala

Grupo Financiero Inbursa

Risk-Adjusted Performance

Very Weak

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

Ayala

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ayala has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Grupo Financiero and Ayala

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

The idea behind Grupo Financiero Inbursa and Ayala 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.