Correlation Between Grupo Posadas and Grupo KUO

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

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

Diversification Opportunities for Grupo Posadas and Grupo KUO

-0.43

Correlation Coefficient

Grupo Posadas  Grupo KUO

Very good diversification

The 3 months correlation between Grupo and Grupo is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Posadas SAB and Grupo KUO SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo KUO SAB and Grupo Posadas 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 Posadas SAB are associated (or correlated) with Grupo KUO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo KUO SAB has no effect on the direction of Grupo Posadas i.e., Grupo Posadas and Grupo KUO go up and down completely randomly.

Pair Corralation between Grupo Posadas and Grupo KUO

Assuming the 90 days trading horizon Grupo Posadas SAB is expected to under-perform the Grupo KUO. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Posadas SAB is 1.98 times less risky than Grupo KUO. The stock trades about -0.12 of its potential returns per unit of risk. The Grupo KUO SAB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,090  in Grupo KUO SAB on October 21, 2024 and sell it today you would earn a total of  510.00  from holding Grupo KUO SAB or generate 12.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Grupo Posadas SAB  vs.  Grupo KUO SAB

Grupo Posadas SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Posadas SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Grupo KUO SAB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo KUO SAB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Grupo KUO showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Posadas and Grupo KUO

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

The idea behind Grupo Posadas SAB and Grupo KUO SAB 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.