Correlation Between Grupo Sports and Corporativo Fragua

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

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

Diversification Opportunities for Grupo Sports and Corporativo Fragua

0.19

Correlation Coefficient

Grupo Sports  Corporativo Fragua

Average diversification

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

Pair Corralation between Grupo Sports and Corporativo Fragua

Assuming the 90 days trading horizon Grupo Sports World is expected to generate 0.42 times more return on investment than Corporativo Fragua. However, Grupo Sports World is 2.39 times less risky than Corporativo Fragua. It trades about 0.01 of its potential returns per unit of risk. Corporativo Fragua SAB is currently generating about -0.04 per unit of risk. If you would invest  638.00  in Grupo Sports World on December 25, 2024 and sell it today you would earn a total of  2.00  from holding Grupo Sports World or generate 0.31% return on investment over 90 days.

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

Grupo Sports World  vs.  Corporativo Fragua SAB

Grupo Sports World

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grupo Sports World has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Grupo Sports is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Corporativo Fragua SAB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Corporativo Fragua SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental 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 Grupo Sports and Corporativo Fragua

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

The idea behind Grupo Sports World and Corporativo Fragua 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.