Correlation Between Compania Hoteliera and Mecanica

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

By analyzing existing cross correlation between Compania Hoteliera InterContinental and Mecanica Sa Ce, you can compare the effects of market volatilities on Compania Hoteliera and Mecanica 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 Compania Hoteliera with a short position of Mecanica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Hoteliera and Mecanica.

Diversification Opportunities for Compania Hoteliera and Mecanica

0.19

Correlation Coefficient

Compania Hoteliera  Mecanica

Average diversification

The 3 months correlation between Compania and Mecanica is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Compania Hoteliera InterContin and Mecanica Sa Ce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mecanica Sa Ce and Compania Hoteliera 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 Compania Hoteliera InterContinental are associated (or correlated) with Mecanica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mecanica Sa Ce has no effect on the direction of Compania Hoteliera i.e., Compania Hoteliera and Mecanica go up and down completely randomly.

Pair Corralation between Compania Hoteliera and Mecanica

Assuming the 90 days trading horizon Compania Hoteliera is expected to generate 2.84 times less return on investment than Mecanica. But when comparing it to its historical volatility, Compania Hoteliera InterContinental is 1.69 times less risky than Mecanica. It trades about 0.01 of its potential returns per unit of risk. Mecanica Sa Ce is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Mecanica Sa Ce on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Mecanica Sa Ce or generate 0.0% return on investment over 90 days.

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

Compania Hoteliera InterContin  vs.  Mecanica Sa Ce

Compania Hoteliera

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compania Hoteliera InterContinental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Compania Hoteliera is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Mecanica Sa Ce

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mecanica Sa Ce are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Mecanica is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Compania Hoteliera and Mecanica

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

The idea behind Compania Hoteliera InterContinental and Mecanica Sa Ce 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.