Correlation Between Grupo Hotelero and Halliburton

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

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

Diversification Opportunities for Grupo Hotelero and Halliburton

0.15

Correlation Coefficient

Grupo Hotelero  Halliburton

Average diversification

The 3 months correlation between Grupo and Halliburton is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Hotelero Santa and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Grupo Hotelero 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 Hotelero Santa are associated (or correlated) with Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Grupo Hotelero i.e., Grupo Hotelero and Halliburton go up and down completely randomly.

Pair Corralation between Grupo Hotelero and Halliburton

Assuming the 90 days trading horizon Grupo Hotelero Santa is expected to generate 0.91 times more return on investment than Halliburton. However, Grupo Hotelero Santa is 1.1 times less risky than Halliburton. It trades about 0.0 of its potential returns per unit of risk. Halliburton is currently generating about -0.03 per unit of risk. If you would invest  390.00  in Grupo Hotelero Santa on December 24, 2024 and sell it today you would lose (5.00) from holding Grupo Hotelero Santa or give up 1.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Grupo Hotelero Santa  vs.  Halliburton

Grupo Hotelero Santa

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grupo Hotelero Santa has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Grupo Hotelero is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Halliburton

Risk-Adjusted Performance

Very Weak

Over the last 90 days Halliburton has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Halliburton is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grupo Hotelero and Halliburton

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

The idea behind Grupo Hotelero Santa and Halliburton 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.