Correlation Between Genomma Lab and Grupo Aeroportuario

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

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

Diversification Opportunities for Genomma Lab and Grupo Aeroportuario

0.58

Correlation Coefficient

Genomma Lab  Grupo Aeroportuario

Very weak diversification

The 3 months correlation between Genomma and Grupo is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Genomma Lab Internacional and Grupo Aeroportuario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeroportuario del and Genomma Lab 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 Genomma Lab Internacional are associated (or correlated) with Grupo Aeroportuario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeroportuario del has no effect on the direction of Genomma Lab i.e., Genomma Lab and Grupo Aeroportuario go up and down completely randomly.

Pair Corralation between Genomma Lab and Grupo Aeroportuario

Assuming the 90 days trading horizon Genomma Lab Internacional is expected to generate 0.76 times more return on investment than Grupo Aeroportuario. However, Genomma Lab Internacional is 1.32 times less risky than Grupo Aeroportuario. It trades about 0.08 of its potential returns per unit of risk. Grupo Aeroportuario del is currently generating about -0.07 per unit of risk. If you would invest  2,524  in Genomma Lab Internacional on September 24, 2024 and sell it today you would earn a total of  54.00  from holding Genomma Lab Internacional or generate 2.14% return on investment over 90 days.

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

Genomma Lab Internacional  vs.  Grupo Aeroportuario del

Genomma Lab Internacional

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genomma Lab Internacional are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Genomma Lab showed solid returns over the last few months and may actually be approaching a breakup point.

Grupo Aeroportuario del

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aeroportuario del are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Grupo Aeroportuario is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Genomma Lab and Grupo Aeroportuario

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

The idea behind Genomma Lab Internacional and Grupo Aeroportuario del 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.