Correlation Between Compania and Grupo Televisa

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

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

Diversification Opportunities for Compania and Grupo Televisa

-0.45

Correlation Coefficient

Compania  Grupo Televisa

Very good diversification

The 3 months correlation between Compania and Grupo is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Transporte and Grupo Televisa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Televisa SAB and Compania 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 de Transporte are associated (or correlated) with Grupo Televisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Televisa SAB has no effect on the direction of Compania i.e., Compania and Grupo Televisa go up and down completely randomly.

Pair Corralation between Compania and Grupo Televisa

Assuming the 90 days trading horizon Compania de Transporte is expected to generate 0.68 times more return on investment than Grupo Televisa. However, Compania de Transporte is 1.47 times less risky than Grupo Televisa. It trades about 0.19 of its potential returns per unit of risk. Grupo Televisa SAB is currently generating about -0.02 per unit of risk. If you would invest  179,000  in Compania de Transporte on September 12, 2024 and sell it today you would earn a total of  60,000  from holding Compania de Transporte or generate 33.52% return on investment over 90 days.

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

Compania de Transporte  vs.  Grupo Televisa SAB

Compania de Transporte

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compania de Transporte are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compania sustained solid returns over the last few months and may actually be approaching a breakup point.

Grupo Televisa SAB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Compania and Grupo Televisa

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

The idea behind Compania de Transporte and Grupo Televisa 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.