Correlation Between Grupo Concesionario and Compania

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

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

Diversification Opportunities for Grupo Concesionario and Compania

0.59

Correlation Coefficient

Grupo Concesionario  Compania

Very weak diversification

The 3 months correlation between Grupo and Compania is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Concesionario del and Compania de Transporte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Transporte and Grupo Concesionario 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 Concesionario del are associated (or correlated) with Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Transporte has no effect on the direction of Grupo Concesionario i.e., Grupo Concesionario and Compania go up and down completely randomly.

Pair Corralation between Grupo Concesionario and Compania

Assuming the 90 days trading horizon Grupo Concesionario del is expected to under-perform the Compania. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Concesionario del is 1.82 times less risky than Compania. The stock trades about -0.24 of its potential returns per unit of risk. The Compania de Transporte is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  287,000  in Compania de Transporte on December 23, 2024 and sell it today you would lose (68,000) from holding Compania de Transporte or give up 23.69% of portfolio value over 90 days.

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

Grupo Concesionario del  vs.  Compania de Transporte

Grupo Concesionario del

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grupo Concesionario del has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Compania de Transporte

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compania de Transporte has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Grupo Concesionario and Compania

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

The idea behind Grupo Concesionario del and Compania de Transporte 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.