Correlation Between Megacable Holdings and Grupo Cementos

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

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

Diversification Opportunities for Megacable Holdings and Grupo Cementos

-0.67

Correlation Coefficient

Megacable Holdings  Grupo Cementos

Excellent diversification

The 3 months correlation between Megacable and Grupo is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Megacable Holdings S and Grupo Cementos de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Cementos de and Megacable Holdings 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 Megacable Holdings S are associated (or correlated) with Grupo Cementos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Cementos de has no effect on the direction of Megacable Holdings i.e., Megacable Holdings and Grupo Cementos go up and down completely randomly.

Pair Corralation between Megacable Holdings and Grupo Cementos

Assuming the 90 days trading horizon Megacable Holdings S is expected to under-perform the Grupo Cementos. In addition to that, Megacable Holdings is 1.06 times more volatile than Grupo Cementos de. It trades about -0.08 of its total potential returns per unit of risk. Grupo Cementos de is currently generating about -0.01 per unit of volatility. If you would invest  19,757  in Grupo Cementos de on September 24, 2024 and sell it today you would lose (1,460) from holding Grupo Cementos de or give up 7.39% of portfolio value over 90 days.

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

Megacable Holdings S  vs.  Grupo Cementos de

Megacable Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Megacable Holdings S 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 basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Grupo Cementos de

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Cementos de are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Grupo Cementos showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Megacable Holdings and Grupo Cementos

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

The idea behind Megacable Holdings S and Grupo Cementos 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.