Correlation Between Promotora and International Business
Can any of the company-specific risk be diversified away by investing in both Promotora and International Business 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 Promotora and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Promotora y Operadora and International Business Machines, you can compare the effects of market volatilities on Promotora and International Business 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 Promotora with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Promotora and International Business.
Diversification Opportunities for Promotora and International Business
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Promotora and International is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Promotora y Operadora and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Promotora 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 Promotora y Operadora are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Promotora i.e., Promotora and International Business go up and down completely randomly.
Pair Corralation between Promotora and International Business
Assuming the 90 days trading horizon Promotora is expected to generate 1.1 times less return on investment than International Business. But when comparing it to its historical volatility, Promotora y Operadora is 1.15 times less risky than International Business. It trades about 0.21 of its potential returns per unit of risk. International Business Machines is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 436,300 in International Business Machines on September 13, 2024 and sell it today you would earn a total of 33,700 from holding International Business Machines or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Promotora y Operadora vs. International Business Machine
Performance |
| Timeline |
| Promotora y Operadora |
| International Business |
Promotora and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Promotora and International Business
The main advantage of trading using opposite Promotora and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Promotora position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| Promotora vs. Gruma SAB de | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del |
| International Business vs. Costco Wholesale | International Business vs. Grupo Hotelero Santa | International Business vs. Monster Beverage Corp | International Business vs. Cognizant Technology Solutions |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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