Correlation Between Promotora and Cydsa SAB

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

By analyzing existing cross correlation between Promotora y Operadora and Cydsa SAB de, you can compare the effects of market volatilities on Promotora and Cydsa SAB 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 Promotora with a short position of Cydsa SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Promotora and Cydsa SAB.

Diversification Opportunities for Promotora and Cydsa SAB

0.68

Correlation Coefficient

Promotora  Cydsa SAB

Poor diversification

The 3 months correlation between Promotora and Cydsa is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Promotora y Operadora and Cydsa SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cydsa SAB de and Promotora 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 Promotora y Operadora are associated (or correlated) with Cydsa SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cydsa SAB de has no effect on the direction of Promotora i.e., Promotora and Cydsa SAB go up and down completely randomly.

Pair Corralation between Promotora and Cydsa SAB

Assuming the 90 days trading horizon Promotora y Operadora is expected to generate 1.77 times more return on investment than Cydsa SAB. However, Promotora is 1.77 times more volatile than Cydsa SAB de. It trades about 0.2 of its potential returns per unit of risk. Cydsa SAB de is currently generating about 0.15 per unit of risk. If you would invest  17,253  in Promotora y Operadora on December 26, 2024 and sell it today you would earn a total of  3,429  from holding Promotora y Operadora or generate 19.87% return on investment over 90 days.

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

Promotora y Operadora  vs.  Cydsa SAB de

Promotora y Operadora

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Promotora y Operadora are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Promotora sustained solid returns over the last few months and may actually be approaching a breakup point.

Cydsa SAB de

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cydsa SAB de are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cydsa SAB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Promotora and Cydsa SAB

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

The idea behind Promotora y Operadora and Cydsa SAB 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.