Correlation Between Grupo Aval and QUALIGEN THERNEW

Can any of the company-specific risk be diversified away by investing in both Grupo Aval and QUALIGEN THERNEW 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 Aval and QUALIGEN THERNEW into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grupo Aval Acciones and QUALIGEN THERNEW DL 001, you can compare the effects of market volatilities on Grupo Aval and QUALIGEN THERNEW 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 Aval with a short position of QUALIGEN THERNEW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aval and QUALIGEN THERNEW.

Diversification Opportunities for Grupo Aval and QUALIGEN THERNEW

-0.52

Correlation Coefficient

Grupo Aval  QUALIGEN THERNEW

Excellent diversification

The 3 months correlation between Grupo and QUALIGEN is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval Acciones and QUALIGEN THERNEW DL 001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUALIGEN THERNEW and Grupo Aval 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 Aval Acciones are associated (or correlated) with QUALIGEN THERNEW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUALIGEN THERNEW has no effect on the direction of Grupo Aval i.e., Grupo Aval and QUALIGEN THERNEW go up and down completely randomly.

Pair Corralation between Grupo Aval and QUALIGEN THERNEW

Assuming the 90 days trading horizon Grupo Aval is expected to generate 5.14 times less return on investment than QUALIGEN THERNEW. But when comparing it to its historical volatility, Grupo Aval Acciones is 17.35 times less risky than QUALIGEN THERNEW. It trades about 0.12 of its potential returns per unit of risk. QUALIGEN THERNEW DL 001 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  575.00  in QUALIGEN THERNEW DL 001 on September 30, 2024 and sell it today you would lose (312.00) from holding QUALIGEN THERNEW DL 001 or give up 54.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Grupo Aval Acciones  vs.  QUALIGEN THERNEW DL 001

Grupo Aval Acciones

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aval Acciones are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Grupo Aval may actually be approaching a critical reversion point that can send shares even higher in January 2025.

QUALIGEN THERNEW

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in QUALIGEN THERNEW DL 001 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, QUALIGEN THERNEW reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Aval and QUALIGEN THERNEW

The main advantage of trading using opposite Grupo Aval and QUALIGEN THERNEW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aval position performs unexpectedly, QUALIGEN THERNEW 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 QUALIGEN THERNEW will offset losses from the drop in QUALIGEN THERNEW's long position.

The idea behind Grupo Aval Acciones and QUALIGEN THERNEW DL 001 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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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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.