Correlation Between Grupo Sports and Value Grupo

Can any of the company-specific risk be diversified away by investing in both Grupo Sports and Value Grupo 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 Value Grupo 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 Value Grupo Financiero, you can compare the effects of market volatilities on Grupo Sports and Value Grupo 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 Value Grupo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Sports and Value Grupo.

Diversification Opportunities for Grupo Sports and Value Grupo

-0.36

Correlation Coefficient

Grupo Sports  Value Grupo

Very good diversification

The 3 months correlation between Grupo and Value is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Sports World and Value Grupo Financiero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Grupo Financiero 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 Value Grupo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Grupo Financiero has no effect on the direction of Grupo Sports i.e., Grupo Sports and Value Grupo go up and down completely randomly.

Pair Corralation between Grupo Sports and Value Grupo

Assuming the 90 days trading horizon Grupo Sports World is expected to under-perform the Value Grupo. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Sports World is 1.8 times less risky than Value Grupo. The stock trades about -0.03 of its potential returns per unit of risk. The Value Grupo Financiero is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9,304  in Value Grupo Financiero on December 23, 2024 and sell it today you would earn a total of  196.00  from holding Value Grupo Financiero or generate 2.11% return on investment over 90 days.

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

Grupo Sports World  vs.  Value Grupo Financiero

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.

Value Grupo Financiero

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Value Grupo Financiero are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Value Grupo is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Grupo Sports and Value Grupo

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

The idea behind Grupo Sports World and Value Grupo Financiero 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.