Correlation Between Corporacin Inmobiliaria and CMR SAB

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

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

Diversification Opportunities for Corporacin Inmobiliaria and CMR SAB

0.3

Correlation Coefficient

Corporacin Inmobiliaria  CMR SAB

Weak diversification

The 3 months correlation between Corporacin and CMR is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Corporacin Inmobiliaria Vesta and CMR SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMR SAB de and Corporacin Inmobiliaria 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 Corporacin Inmobiliaria Vesta are associated (or correlated) with CMR SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMR SAB de has no effect on the direction of Corporacin Inmobiliaria i.e., Corporacin Inmobiliaria and CMR SAB go up and down completely randomly.

Pair Corralation between Corporacin Inmobiliaria and CMR SAB

Assuming the 90 days trading horizon Corporacin Inmobiliaria is expected to generate 67.02 times less return on investment than CMR SAB. But when comparing it to its historical volatility, Corporacin Inmobiliaria Vesta is 2.99 times less risky than CMR SAB. It trades about 0.0 of its potential returns per unit of risk. CMR SAB de is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  131.00  in CMR SAB de on December 2, 2024 and sell it today you would earn a total of  26.00  from holding CMR SAB de or generate 19.85% return on investment over 90 days.

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

Corporacin Inmobiliaria Vesta  vs.  CMR SAB de

Corporacin Inmobiliaria

Risk-Adjusted Performance

Very Weak

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

CMR SAB de

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CMR SAB de are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, CMR SAB showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Corporacin Inmobiliaria and CMR SAB

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

The idea behind Corporacin Inmobiliaria Vesta and CMR SAB de 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.