Correlation Between Grupo Profuturo and FibraHotel

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

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

Diversification Opportunities for Grupo Profuturo and FibraHotel

0.25

Correlation Coefficient

Grupo Profuturo  FibraHotel

Modest diversification

The 3 months correlation between Grupo and FibraHotel is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Profuturo SAB and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel and Grupo Profuturo 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 Profuturo SAB are associated (or correlated) with FibraHotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibraHotel has no effect on the direction of Grupo Profuturo i.e., Grupo Profuturo and FibraHotel go up and down completely randomly.

Pair Corralation between Grupo Profuturo and FibraHotel

Assuming the 90 days trading horizon Grupo Profuturo SAB is expected to generate 0.38 times more return on investment than FibraHotel. However, Grupo Profuturo SAB is 2.65 times less risky than FibraHotel. It trades about 0.2 of its potential returns per unit of risk. FibraHotel is currently generating about 0.04 per unit of risk. If you would invest  10,500  in Grupo Profuturo SAB on December 30, 2024 and sell it today you would earn a total of  1,700  from holding Grupo Profuturo SAB or generate 16.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Grupo Profuturo SAB  vs.  FibraHotel

Grupo Profuturo SAB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Profuturo SAB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Grupo Profuturo unveiled solid returns over the last few months and may actually be approaching a breakup point.

FibraHotel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FibraHotel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, FibraHotel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Grupo Profuturo and FibraHotel

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

The idea behind Grupo Profuturo SAB and FibraHotel 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..