Correlation Between Molina Healthcare and GRUPO CARSO-A1

Can any of the company-specific risk be diversified away by investing in both Molina Healthcare and GRUPO CARSO-A1 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 Molina Healthcare and GRUPO CARSO-A1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Molina Healthcare and GRUPO CARSO A1, you can compare the effects of market volatilities on Molina Healthcare and GRUPO CARSO-A1 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 Molina Healthcare with a short position of GRUPO CARSO-A1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molina Healthcare and GRUPO CARSO-A1.

Diversification Opportunities for Molina Healthcare and GRUPO CARSO-A1

0.15

Correlation Coefficient

Molina Healthcare  GRUPO CARSO-A1

Average diversification

The 3 months correlation between Molina and GRUPO is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Molina Healthcare and GRUPO CARSO A1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRUPO CARSO A1 and Molina Healthcare 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 Molina Healthcare are associated (or correlated) with GRUPO CARSO-A1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRUPO CARSO A1 has no effect on the direction of Molina Healthcare i.e., Molina Healthcare and GRUPO CARSO-A1 go up and down completely randomly.

Pair Corralation between Molina Healthcare and GRUPO CARSO-A1

Assuming the 90 days trading horizon Molina Healthcare is expected to generate 6.92 times less return on investment than GRUPO CARSO-A1. But when comparing it to its historical volatility, Molina Healthcare is 1.82 times less risky than GRUPO CARSO-A1. It trades about 0.02 of its potential returns per unit of risk. GRUPO CARSO A1 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  237.00  in GRUPO CARSO A1 on October 11, 2024 and sell it today you would earn a total of  273.00  from holding GRUPO CARSO A1 or generate 115.19% return on investment over 90 days.

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

Molina Healthcare  vs.  GRUPO CARSO A1

Molina Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Molina Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Molina Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

GRUPO CARSO A1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRUPO CARSO A1 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Molina Healthcare and GRUPO CARSO-A1

The main advantage of trading using opposite Molina Healthcare and GRUPO CARSO-A1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Molina Healthcare position performs unexpectedly, GRUPO CARSO-A1 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 CARSO-A1 will offset losses from the drop in GRUPO CARSO-A1's long position.

The idea behind Molina Healthcare and GRUPO CARSO A1 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..