Correlation Between Pea Verde and Grupo Cementos

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

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

Diversification Opportunities for Pea Verde and Grupo Cementos

0.0

Correlation Coefficient

Pea Verde  Grupo Cementos

Pay attention - limited upside

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

Pair Corralation between Pea Verde and Grupo Cementos

If you would invest  15,698  in Grupo Cementos de on September 23, 2024 and sell it today you would earn a total of  2,599  from holding Grupo Cementos de or generate 16.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Pea Verde SAB  vs.  Grupo Cementos de

Pea Verde SAB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Grupo Cementos de

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Cementos de are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Grupo Cementos showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pea Verde and Grupo Cementos

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

The idea behind Pea Verde SAB and Grupo Cementos 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.