Correlation Between Grimoldi and Compania

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

By analyzing existing cross correlation between Grimoldi SA and Compania de Transporte, you can compare the effects of market volatilities on Grimoldi and Compania 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 Grimoldi with a short position of Compania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grimoldi and Compania.

Diversification Opportunities for Grimoldi and Compania

0.17

Correlation Coefficient

Grimoldi  Compania

Average diversification

The 3 months correlation between Grimoldi and Compania is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Grimoldi SA and Compania de Transporte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Transporte and Grimoldi 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 Grimoldi SA are associated (or correlated) with Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Transporte has no effect on the direction of Grimoldi i.e., Grimoldi and Compania go up and down completely randomly.

Pair Corralation between Grimoldi and Compania

Assuming the 90 days trading horizon Grimoldi SA is expected to generate 0.83 times more return on investment than Compania. However, Grimoldi SA is 1.2 times less risky than Compania. It trades about 0.05 of its potential returns per unit of risk. Compania de Transporte is currently generating about -0.1 per unit of risk. If you would invest  133,000  in Grimoldi SA on December 22, 2024 and sell it today you would earn a total of  8,500  from holding Grimoldi SA or generate 6.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Grimoldi SA  vs.  Compania de Transporte

Grimoldi SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grimoldi SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Grimoldi may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Compania de Transporte

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compania de Transporte 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 basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Grimoldi and Compania

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

The idea behind Grimoldi SA and Compania de Transporte 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.