Correlation Between Sony and Grupo Cementos
Can any of the company-specific risk be diversified away by investing in both Sony and Grupo Cementos 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 Sony and Grupo Cementos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Group and Grupo Cementos de, you can compare the effects of market volatilities on Sony and Grupo Cementos 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 Sony with a short position of Grupo Cementos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony and Grupo Cementos.
Diversification Opportunities for Sony and Grupo Cementos
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sony and Grupo is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and Grupo Cementos de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Cementos de and Sony 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 Sony Group are associated (or correlated) with Grupo Cementos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Cementos de has no effect on the direction of Sony i.e., Sony and Grupo Cementos go up and down completely randomly.
Pair Corralation between Sony and Grupo Cementos
Assuming the 90 days trading horizon Sony Group is expected to generate 0.97 times more return on investment than Grupo Cementos. However, Sony Group is 1.04 times less risky than Grupo Cementos. It trades about 0.06 of its potential returns per unit of risk. Grupo Cementos de is currently generating about 0.04 per unit of risk. If you would invest 31,580 in Sony Group on September 12, 2024 and sell it today you would earn a total of 12,620 from holding Sony Group or generate 39.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.73% |
| Values | Daily Returns |
Sony Group vs. Grupo Cementos de
Performance |
| Timeline |
| Sony Group |
| Grupo Cementos de |
Sony and Grupo Cementos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony and Grupo Cementos
The main advantage of trading using opposite Sony and Grupo Cementos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony position performs unexpectedly, Grupo Cementos 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 Cementos will offset losses from the drop in Grupo Cementos' long position.The idea behind Sony Group and Grupo Cementos 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.| Grupo Cementos vs. CEMEX SAB de | Grupo Cementos vs. Grupo Financiero Banorte | Grupo Cementos vs. Alfa SAB de | Grupo Cementos vs. Fomento Econmico Mexicano |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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