Correlation Between Promotora and Royal Caribbean

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

Diversification Opportunities for Promotora and Royal Caribbean

0.17

Correlation Coefficient

Promotora  Royal Caribbean

Average diversification

The 3 months correlation between Promotora and Royal is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Promotora y Operadora and Royal Caribbean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Caribbean Group 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 Royal Caribbean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Caribbean Group has no effect on the direction of Promotora i.e., Promotora and Royal Caribbean go up and down completely randomly.

Pair Corralation between Promotora and Royal Caribbean

Assuming the 90 days trading horizon Promotora y Operadora is expected to generate 0.49 times more return on investment than Royal Caribbean. However, Promotora y Operadora is 2.05 times less risky than Royal Caribbean. It trades about 0.18 of its potential returns per unit of risk. Royal Caribbean Group is currently generating about -0.04 per unit of risk. If you would invest  17,325  in Promotora y Operadora on December 24, 2024 and sell it today you would earn a total of  2,944  from holding Promotora y Operadora or generate 16.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Promotora y Operadora  vs.  Royal Caribbean Group

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 14 (%) 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.

Royal Caribbean Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royal Caribbean Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Promotora and Royal Caribbean

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

The idea behind Promotora y Operadora and Royal Caribbean Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.