Correlation Between Grupo Televisa and Lincoln Electric

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

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

Diversification Opportunities for Grupo Televisa and Lincoln Electric

0.62

Correlation Coefficient

Grupo Televisa  Lincoln Electric

Poor diversification

The 3 months correlation between Grupo and Lincoln is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Televisa SAB and Lincoln Electric Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln Electric Holdings and Grupo Televisa 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 Televisa SAB are associated (or correlated) with Lincoln Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln Electric Holdings has no effect on the direction of Grupo Televisa i.e., Grupo Televisa and Lincoln Electric go up and down completely randomly.

Pair Corralation between Grupo Televisa and Lincoln Electric

Allowing for the 90-day total investment horizon Grupo Televisa SAB is expected to generate 1.43 times more return on investment than Lincoln Electric. However, Grupo Televisa is 1.43 times more volatile than Lincoln Electric Holdings. It trades about 0.05 of its potential returns per unit of risk. Lincoln Electric Holdings is currently generating about 0.04 per unit of risk. If you would invest  169.00  in Grupo Televisa SAB on December 28, 2024 and sell it today you would earn a total of  12.00  from holding Grupo Televisa SAB or generate 7.1% return on investment over 90 days.

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

Grupo Televisa SAB  vs.  Lincoln Electric Holdings

Grupo Televisa SAB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Televisa SAB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Grupo Televisa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Lincoln Electric Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Electric Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Lincoln Electric is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Grupo Televisa and Lincoln Electric

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

The idea behind Grupo Televisa SAB and Lincoln Electric Holdings 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.