Correlation Between A O and G Collado

Can any of the company-specific risk be diversified away by investing in both A O and G Collado 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 A O and G Collado into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between A O Smith and G Collado SAB, you can compare the effects of market volatilities on A O and G Collado 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 A O with a short position of G Collado. Check out your portfolio center. Please also check ongoing floating volatility patterns of A O and G Collado.

Diversification Opportunities for A O and G Collado

0.97

Correlation Coefficient

A O  G Collado

Almost no diversification

The 3 months correlation between AOS and COLLADO is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding A O Smith and G Collado SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Collado SAB and A O 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 A O Smith are associated (or correlated) with G Collado. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Collado SAB has no effect on the direction of A O i.e., A O and G Collado go up and down completely randomly.

Pair Corralation between A O and G Collado

Assuming the 90 days trading horizon A O is expected to generate 90.8 times less return on investment than G Collado. But when comparing it to its historical volatility, A O Smith is 98.42 times less risky than G Collado. It trades about 0.14 of its potential returns per unit of risk. G Collado SAB is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  759.00  in G Collado SAB on September 29, 2024 and sell it today you would earn a total of  21.00  from holding G Collado SAB or generate 2.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

A O Smith  vs.  G Collado SAB

A O Smith

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in A O Smith are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, A O is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

G Collado SAB

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in G Collado SAB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, G Collado is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with A O and G Collado

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

The idea behind A O Smith and G Collado 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.