Correlation Between Grupo Profuturo and Grupo Sports

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

Diversification Opportunities for Grupo Profuturo and Grupo Sports

-0.06

Correlation Coefficient

Grupo Profuturo  Grupo Sports

Good diversification

The 3 months correlation between Grupo and Grupo is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Profuturo SAB and Grupo Sports World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Sports World 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 Grupo Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Sports World has no effect on the direction of Grupo Profuturo i.e., Grupo Profuturo and Grupo Sports go up and down completely randomly.

Pair Corralation between Grupo Profuturo and Grupo Sports

Assuming the 90 days trading horizon Grupo Profuturo SAB is expected to generate 1.02 times more return on investment than Grupo Sports. However, Grupo Profuturo is 1.02 times more volatile than Grupo Sports World. It trades about 0.2 of its potential returns per unit of risk. Grupo Sports World is currently generating about 0.01 per unit of risk. If you would invest  10,500  in Grupo Profuturo SAB on December 29, 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Grupo Profuturo SAB  vs.  Grupo Sports World

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 weak basic indicators, Grupo Profuturo unveiled solid returns over the last few months and may actually be approaching a breakup point.

Grupo Sports World

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grupo Sports World has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Grupo Sports 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 Profuturo and Grupo Sports

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

The idea behind Grupo Profuturo SAB and Grupo Sports World 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.