Correlation Between Axtel SAB and Desarrolladora Homex

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Can any of the company-specific risk be diversified away by investing in both Axtel SAB and Desarrolladora Homex 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 Axtel SAB and Desarrolladora Homex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axtel SAB de and Desarrolladora Homex SAB, you can compare the effects of market volatilities on Axtel SAB and Desarrolladora Homex 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 Axtel SAB with a short position of Desarrolladora Homex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axtel SAB and Desarrolladora Homex.

Diversification Opportunities for Axtel SAB and Desarrolladora Homex

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between Axtel and Desarrolladora is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Axtel SAB de and Desarrolladora Homex SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desarrolladora Homex SAB and Axtel SAB 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 Axtel SAB de are associated (or correlated) with Desarrolladora Homex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desarrolladora Homex SAB has no effect on the direction of Axtel SAB i.e., Axtel SAB and Desarrolladora Homex go up and down completely randomly.

Pair Corralation between Axtel SAB and Desarrolladora Homex

Assuming the 90 days trading horizon Axtel SAB de is expected to generate 0.47 times more return on investment than Desarrolladora Homex. However, Axtel SAB de is 2.11 times less risky than Desarrolladora Homex. It trades about 0.06 of its potential returns per unit of risk. Desarrolladora Homex SAB is currently generating about -0.07 per unit of risk. If you would invest  74.00  in Axtel SAB de on September 4, 2024 and sell it today you would earn a total of  39.00  from holding Axtel SAB de or generate 52.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.65%
ValuesDaily Returns

Axtel SAB de  vs.  Desarrolladora Homex SAB

 Performance 
       Timeline  
Axtel SAB de 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Axtel SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Axtel SAB is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.
Desarrolladora Homex SAB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Desarrolladora Homex SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Axtel SAB and Desarrolladora Homex Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Axtel SAB and Desarrolladora Homex

The main advantage of trading using opposite Axtel SAB and Desarrolladora Homex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axtel SAB position performs unexpectedly, Desarrolladora Homex 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 Desarrolladora Homex will offset losses from the drop in Desarrolladora Homex's long position.
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The idea behind Axtel SAB de and Desarrolladora Homex SAB 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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