Correlation Between El Puerto and La Comer

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

Diversification Opportunities for El Puerto and La Comer

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between LIVEPOL1 and LACOMERUBC is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding El Puerto de and La Comer SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Comer SAB and El Puerto 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 El Puerto de are associated (or correlated) with La Comer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Comer SAB has no effect on the direction of El Puerto i.e., El Puerto and La Comer go up and down completely randomly.

Pair Corralation between El Puerto and La Comer

Assuming the 90 days trading horizon El Puerto de is expected to generate 0.09 times more return on investment than La Comer. However, El Puerto de is 10.63 times less risky than La Comer. It trades about -0.22 of its potential returns per unit of risk. La Comer SAB is currently generating about -0.14 per unit of risk. If you would invest  10,600  in El Puerto de on October 20, 2024 and sell it today you would lose (80.00) from holding El Puerto de or give up 0.75% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.24%
ValuesDaily Returns

El Puerto de  vs.  La Comer SAB

 Performance 
       Timeline  
El Puerto de 

Risk-Adjusted Performance

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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 latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.
La Comer SAB 

Risk-Adjusted Performance

0 of 100

 
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 inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

El Puerto and La Comer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with El Puerto and La Comer

The main advantage of trading using opposite El Puerto and La Comer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Puerto position performs unexpectedly, La Comer 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 La Comer will offset losses from the drop in La Comer's long position.
The idea behind El Puerto de and La Comer 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.
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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