Correlation Between Grupo Aeroportuario and Collective Mining

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

By analyzing existing cross correlation between Grupo Aeroportuario del and Collective Mining, you can compare the effects of market volatilities on Grupo Aeroportuario and Collective Mining 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 Aeroportuario with a short position of Collective Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aeroportuario and Collective Mining.

Diversification Opportunities for Grupo Aeroportuario and Collective Mining

-0.5

Correlation Coefficient

Grupo Aeroportuario  Collective Mining

Very good diversification

The 3 months correlation between Grupo and Collective is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aeroportuario del and Collective Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collective Mining and Grupo Aeroportuario 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 Aeroportuario del are associated (or correlated) with Collective Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collective Mining has no effect on the direction of Grupo Aeroportuario i.e., Grupo Aeroportuario and Collective Mining go up and down completely randomly.

Pair Corralation between Grupo Aeroportuario and Collective Mining

Considering the 90-day investment horizon Grupo Aeroportuario is expected to generate 6.21 times less return on investment than Collective Mining. But when comparing it to its historical volatility, Grupo Aeroportuario del is 1.8 times less risky than Collective Mining. It trades about 0.06 of its potential returns per unit of risk. Collective Mining is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  362.00  in Collective Mining on September 27, 2024 and sell it today you would earn a total of  52.00  from holding Collective Mining or generate 14.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Grupo Aeroportuario del  vs.  Collective Mining

Grupo Aeroportuario del

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Aeroportuario del has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Grupo Aeroportuario is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Collective Mining

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Collective Mining are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Collective Mining disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Aeroportuario and Collective Mining

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

The idea behind Grupo Aeroportuario del and Collective Mining 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.