Correlation Between Grupo Hotelero and Grupo Minsa

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

Diversification Opportunities for Grupo Hotelero and Grupo Minsa

-0.47

Correlation Coefficient

Grupo Hotelero  Grupo Minsa

Very good diversification

The 3 months correlation between Grupo and Grupo is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Hotelero Santa and Grupo Minsa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Minsa SAB 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 Grupo Minsa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Minsa SAB has no effect on the direction of Grupo Hotelero i.e., Grupo Hotelero and Grupo Minsa go up and down completely randomly.

Pair Corralation between Grupo Hotelero and Grupo Minsa

Assuming the 90 days trading horizon Grupo Hotelero is expected to generate 185.83 times less return on investment than Grupo Minsa. In addition to that, Grupo Hotelero is 2.21 times more volatile than Grupo Minsa SAB. It trades about 0.0 of its total potential returns per unit of risk. Grupo Minsa SAB is currently generating about 0.26 per unit of volatility. If you would invest  909.00  in Grupo Minsa SAB on December 23, 2024 and sell it today you would earn a total of  130.00  from holding Grupo Minsa SAB or generate 14.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Grupo Hotelero Santa  vs.  Grupo Minsa SAB

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.

Grupo Minsa SAB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Minsa SAB are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Grupo Minsa sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Hotelero and Grupo Minsa

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

The idea behind Grupo Hotelero Santa and Grupo Minsa SAB 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.