Correlation Between Grupo Aval and Atea Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Grupo Aval and Atea Pharmaceuticals 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 Atea Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Aval and Atea Pharmaceuticals, you can compare the effects of market volatilities on Grupo Aval and Atea Pharmaceuticals 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 Atea Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aval and Atea Pharmaceuticals.
Diversification Opportunities for Grupo Aval and Atea Pharmaceuticals
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grupo and Atea is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval and Atea Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atea Pharmaceuticals 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 are associated (or correlated) with Atea Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atea Pharmaceuticals has no effect on the direction of Grupo Aval i.e., Grupo Aval and Atea Pharmaceuticals go up and down completely randomly.
Pair Corralation between Grupo Aval and Atea Pharmaceuticals
Given the investment horizon of 90 days Grupo Aval is expected to generate 0.58 times more return on investment than Atea Pharmaceuticals. However, Grupo Aval is 1.72 times less risky than Atea Pharmaceuticals. It trades about 0.17 of its potential returns per unit of risk. Atea Pharmaceuticals is currently generating about 0.05 per unit of risk. If you would invest 200.00 in Grupo Aval on September 3, 2024 and sell it today you would earn a total of 11.00 from holding Grupo Aval or generate 5.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Aval vs. Atea Pharmaceuticals
Performance |
| Timeline |
| Grupo Aval |
| Atea Pharmaceuticals |
Grupo Aval and Atea Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Aval and Atea Pharmaceuticals
The main advantage of trading using opposite Grupo Aval and Atea Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aval position performs unexpectedly, Atea Pharmaceuticals 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 Atea Pharmaceuticals will offset losses from the drop in Atea Pharmaceuticals' long position.| Grupo Aval vs. Banco De Chile | Grupo Aval vs. Banco Santander Chile | Grupo Aval vs. Credicorp | Grupo Aval vs. Foreign Trade Bank |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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