Correlation Between Grupo Hotelero and Grupo Gigante

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

Diversification Opportunities for Grupo Hotelero and Grupo Gigante

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Grupo and Grupo is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Hotelero Santa and Grupo Gigante S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Gigante S and Grupo Hotelero 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 Hotelero Santa are associated (or correlated) with Grupo Gigante. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Gigante S has no effect on the direction of Grupo Hotelero i.e., Grupo Hotelero and Grupo Gigante go up and down completely randomly.

Pair Corralation between Grupo Hotelero and Grupo Gigante

Assuming the 90 days trading horizon Grupo Hotelero Santa is expected to generate 1.33 times more return on investment than Grupo Gigante. However, Grupo Hotelero is 1.33 times more volatile than Grupo Gigante S. It trades about -0.02 of its potential returns per unit of risk. Grupo Gigante S is currently generating about -0.03 per unit of risk. If you would invest  400.00  in Grupo Hotelero Santa on September 14, 2024 and sell it today you would lose (50.00) from holding Grupo Hotelero Santa or give up 12.5% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.63%
ValuesDaily Returns

Grupo Hotelero Santa  vs.  Grupo Gigante S

 Performance 
       Timeline  
Grupo Hotelero Santa 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Gigante S are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Grupo Gigante may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Grupo Hotelero and Grupo Gigante Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grupo Hotelero and Grupo Gigante

The main advantage of trading using opposite Grupo Hotelero and Grupo Gigante positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Hotelero position performs unexpectedly, Grupo Gigante 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 Gigante will offset losses from the drop in Grupo Gigante's long position.
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The idea behind Grupo Hotelero Santa and Grupo Gigante S 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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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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