Correlation Between La Comer and El Puerto

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

Diversification Opportunities for La Comer and El Puerto

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between LACOMERUBC and LIVEPOL1 is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding La Comer SAB and El Puerto de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Puerto de and La Comer 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 La Comer SAB are associated (or correlated) with El Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Puerto de has no effect on the direction of La Comer i.e., La Comer and El Puerto go up and down completely randomly.

Pair Corralation between La Comer and El Puerto

Assuming the 90 days trading horizon La Comer SAB is expected to generate 2.22 times more return on investment than El Puerto. However, La Comer is 2.22 times more volatile than El Puerto de. It trades about 0.01 of its potential returns per unit of risk. El Puerto de is currently generating about -0.16 per unit of risk. If you would invest  3,392  in La Comer SAB on November 2, 2024 and sell it today you would earn a total of  4.00  from holding La Comer SAB or generate 0.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.03%
ValuesDaily Returns

La Comer SAB  vs.  El Puerto de

 Performance 
       Timeline  
La Comer SAB 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days La Comer SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.
El Puerto de 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days El Puerto de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, El Puerto is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

La Comer and El Puerto Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with La Comer and El Puerto

The main advantage of trading using opposite La Comer and El Puerto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if La Comer position performs unexpectedly, El Puerto 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 El Puerto will offset losses from the drop in El Puerto's long position.
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The idea behind La Comer SAB and El Puerto de 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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