Correlation Between Hoteles City and Cydsa SAB

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

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

Diversification Opportunities for Hoteles City and Cydsa SAB

-0.69

Correlation Coefficient

Hoteles City  Cydsa SAB

Excellent diversification

The 3 months correlation between Hoteles and Cydsa is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hoteles City Express and Cydsa SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cydsa SAB de and Hoteles City 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 Hoteles City Express are associated (or correlated) with Cydsa SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cydsa SAB de has no effect on the direction of Hoteles City i.e., Hoteles City and Cydsa SAB go up and down completely randomly.

Pair Corralation between Hoteles City and Cydsa SAB

Assuming the 90 days trading horizon Hoteles City Express is expected to under-perform the Cydsa SAB. In addition to that, Hoteles City is 1.96 times more volatile than Cydsa SAB de. It trades about -0.1 of its total potential returns per unit of risk. Cydsa SAB de is currently generating about 0.11 per unit of volatility. If you would invest  1,590  in Cydsa SAB de on October 24, 2024 and sell it today you would earn a total of  108.00  from holding Cydsa SAB de or generate 6.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Hoteles City Express  vs.  Cydsa SAB de

Hoteles City Express

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hoteles City Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cydsa SAB de

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cydsa SAB de are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cydsa SAB may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hoteles City and Cydsa SAB

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

The idea behind Hoteles City Express and Cydsa SAB de 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.