Correlation Between Grupo Aval and CEZ A
Can any of the company-specific risk be diversified away by investing in both Grupo Aval and CEZ A 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 Aval and CEZ A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Aval Acciones and CEZ a s, you can compare the effects of market volatilities on Grupo Aval and CEZ A 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 Aval with a short position of CEZ A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aval and CEZ A.
Diversification Opportunities for Grupo Aval and CEZ A
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grupo and CEZ is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval Acciones and CEZ a s in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEZ a s and Grupo Aval 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 Aval Acciones are associated (or correlated) with CEZ A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEZ a s has no effect on the direction of Grupo Aval i.e., Grupo Aval and CEZ A go up and down completely randomly.
Pair Corralation between Grupo Aval and CEZ A
Assuming the 90 days trading horizon Grupo Aval Acciones is expected to generate 2.8 times more return on investment than CEZ A. However, Grupo Aval is 2.8 times more volatile than CEZ a s. It trades about 0.33 of its potential returns per unit of risk. CEZ a s is currently generating about -0.07 per unit of risk. If you would invest 225.00 in Grupo Aval Acciones on November 29, 2024 and sell it today you would earn a total of 69.00 from holding Grupo Aval Acciones or generate 30.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Aval Acciones vs. CEZ a s
Performance |
| Timeline |
| Grupo Aval Acciones |
| CEZ a s |
Grupo Aval and CEZ A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Aval and CEZ A
The main advantage of trading using opposite Grupo Aval and CEZ A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aval position performs unexpectedly, CEZ A 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 CEZ A will offset losses from the drop in CEZ A's long position.| Grupo Aval vs. ScanSource | Grupo Aval vs. Cass Information Systems | Grupo Aval vs. MICRONIC MYDATA | Grupo Aval vs. Stewart Information Services |
| CEZ A vs. HK Electric Investments | CEZ A vs. Tamburi Investment Partners | CEZ A vs. American Airlines Group | CEZ A vs. REINET INVESTMENTS SCA |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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