Correlation Between Grupo Aeroportuario and Corporacin Interamericana

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

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

Diversification Opportunities for Grupo Aeroportuario and Corporacin Interamericana

-0.03

Correlation Coefficient

Grupo Aeroportuario  Corporacin Interamericana

Good diversification

The 3 months correlation between Grupo and Corporacin is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aeroportuario del and Corporacin Interamericana de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacin Interamericana and Grupo Aeroportuario 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 Aeroportuario del are associated (or correlated) with Corporacin Interamericana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacin Interamericana has no effect on the direction of Grupo Aeroportuario i.e., Grupo Aeroportuario and Corporacin Interamericana go up and down completely randomly.

Pair Corralation between Grupo Aeroportuario and Corporacin Interamericana

Assuming the 90 days trading horizon Grupo Aeroportuario del is expected to generate 1.25 times more return on investment than Corporacin Interamericana. However, Grupo Aeroportuario is 1.25 times more volatile than Corporacin Interamericana de. It trades about 0.1 of its potential returns per unit of risk. Corporacin Interamericana de is currently generating about 0.06 per unit of risk. If you would invest  17,764  in Grupo Aeroportuario del on December 29, 2024 and sell it today you would earn a total of  2,356  from holding Grupo Aeroportuario del or generate 13.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Grupo Aeroportuario del  vs.  Corporacin Interamericana de

Grupo Aeroportuario del

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aeroportuario del are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Grupo Aeroportuario showed solid returns over the last few months and may actually be approaching a breakup point.

Corporacin Interamericana

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacin Interamericana de are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Corporacin Interamericana is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grupo Aeroportuario and Corporacin Interamericana

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

The idea behind Grupo Aeroportuario del and Corporacin Interamericana 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.