Correlation Between Grupo Aeroportuario and Corporacion America

Can any of the company-specific risk be diversified away by investing in both Grupo Aeroportuario and Corporacion America 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 Corporacion America 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 Corporacion America Airports, you can compare the effects of market volatilities on Grupo Aeroportuario and Corporacion America 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 Corporacion America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aeroportuario and Corporacion America.

Diversification Opportunities for Grupo Aeroportuario and Corporacion America

0.23

Correlation Coefficient

Grupo Aeroportuario  Corporacion America

Modest diversification

The 3 months correlation between Grupo and Corporacion is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aeroportuario del and Corporacion America Airports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion America 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 Corporacion America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacion America has no effect on the direction of Grupo Aeroportuario i.e., Grupo Aeroportuario and Corporacion America go up and down completely randomly.

Pair Corralation between Grupo Aeroportuario and Corporacion America

Considering the 90-day investment horizon Grupo Aeroportuario del is expected to generate 0.9 times more return on investment than Corporacion America. However, Grupo Aeroportuario del is 1.11 times less risky than Corporacion America. It trades about 0.04 of its potential returns per unit of risk. Corporacion America Airports is currently generating about 0.0 per unit of risk. If you would invest  18,798  in Grupo Aeroportuario del on November 29, 2024 and sell it today you would earn a total of  645.00  from holding Grupo Aeroportuario del or generate 3.43% return on investment over 90 days.

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

Grupo Aeroportuario del  vs.  Corporacion America Airports

Grupo Aeroportuario del

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aeroportuario del are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Grupo Aeroportuario is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Corporacion America

Risk-Adjusted Performance

Very Weak

Over the last 90 days Corporacion America Airports has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Corporacion America is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Grupo Aeroportuario and Corporacion America

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

The idea behind Grupo Aeroportuario del and Corporacion America Airports 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.