Correlation Between SYSTEMAIR and Grupo Aval
Can any of the company-specific risk be diversified away by investing in both SYSTEMAIR and Grupo Aval 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 SYSTEMAIR and Grupo Aval into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SYSTEMAIR AB and Grupo Aval Acciones, you can compare the effects of market volatilities on SYSTEMAIR and Grupo Aval 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 SYSTEMAIR with a short position of Grupo Aval. Check out your portfolio center. Please also check ongoing floating volatility patterns of SYSTEMAIR and Grupo Aval.
Diversification Opportunities for SYSTEMAIR and Grupo Aval
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SYSTEMAIR and Grupo is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB and Grupo Aval Acciones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aval Acciones and SYSTEMAIR 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 SYSTEMAIR AB are associated (or correlated) with Grupo Aval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aval Acciones has no effect on the direction of SYSTEMAIR i.e., SYSTEMAIR and Grupo Aval go up and down completely randomly.
Pair Corralation between SYSTEMAIR and Grupo Aval
Assuming the 90 days trading horizon SYSTEMAIR AB is expected to generate 1.34 times more return on investment than Grupo Aval. However, SYSTEMAIR is 1.34 times more volatile than Grupo Aval Acciones. It trades about 0.06 of its potential returns per unit of risk. Grupo Aval Acciones is currently generating about 0.01 per unit of risk. If you would invest 395.00 in SYSTEMAIR AB on September 12, 2024 and sell it today you would earn a total of 413.00 from holding SYSTEMAIR AB or generate 104.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SYSTEMAIR AB vs. Grupo Aval Acciones
Performance |
| Timeline |
| SYSTEMAIR AB |
| Grupo Aval Acciones |
SYSTEMAIR and Grupo Aval Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SYSTEMAIR and Grupo Aval
The main advantage of trading using opposite SYSTEMAIR and Grupo Aval positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SYSTEMAIR position performs unexpectedly, Grupo Aval 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 Aval will offset losses from the drop in Grupo Aval's long position.The idea behind SYSTEMAIR AB and Grupo Aval Acciones 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.| Grupo Aval vs. POSBO UNSPADRS20YC1 | Grupo Aval vs. Postal Savings Bank | Grupo Aval vs. UTD OV BK LOC ADR1 | Grupo Aval vs. Superior Plus Corp |
Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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