Correlation Between Prudential Plc and Grupo Gigante

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

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

Diversification Opportunities for Prudential Plc and Grupo Gigante

0.0

Correlation Coefficient

Prudential Plc  Grupo Gigante

Pay attention - limited upside

The 3 months correlation between Prudential and Grupo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Prudential plc and Grupo Gigante S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Gigante S and Prudential Plc 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 Prudential plc are associated (or correlated) with Grupo Gigante. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Gigante S has no effect on the direction of Prudential Plc i.e., Prudential Plc and Grupo Gigante go up and down completely randomly.

Pair Corralation between Prudential Plc and Grupo Gigante

Assuming the 90 days trading horizon Prudential plc is not expected to generate positive returns. However, Prudential plc is 488.37 times less risky than Grupo Gigante. It waists most of its returns potential to compensate for thr risk taken. Grupo Gigante is generating about -0.04 per unit of risk. If you would invest  43,900  in Prudential plc on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Prudential plc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Prudential plc  vs.  Grupo Gigante S

Prudential plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Prudential Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Grupo Gigante S

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Gigante S are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Grupo Gigante exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prudential Plc and Grupo Gigante

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

The idea behind Prudential plc and Grupo Gigante S 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 Commodity Directory module to find actively traded commodities issued by global exchanges.