Correlation Between Grupo Aval and Cannabis Sativa

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Can any of the company-specific risk be diversified away by investing in both Grupo Aval and Cannabis Sativa 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 Cannabis Sativa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Aval and Cannabis Sativa, you can compare the effects of market volatilities on Grupo Aval and Cannabis Sativa 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 Cannabis Sativa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aval and Cannabis Sativa.

Diversification Opportunities for Grupo Aval and Cannabis Sativa

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Grupo and Cannabis is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval and Cannabis Sativa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannabis Sativa 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 are associated (or correlated) with Cannabis Sativa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannabis Sativa has no effect on the direction of Grupo Aval i.e., Grupo Aval and Cannabis Sativa go up and down completely randomly.

Pair Corralation between Grupo Aval and Cannabis Sativa

Given the investment horizon of 90 days Grupo Aval is expected to under-perform the Cannabis Sativa. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Aval is 12.96 times less risky than Cannabis Sativa. The stock trades about -0.01 of its potential returns per unit of risk. The Cannabis Sativa is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2.33  in Cannabis Sativa on September 5, 2024 and sell it today you would earn a total of  5.77  from holding Cannabis Sativa or generate 247.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Grupo Aval  vs.  Cannabis Sativa

 Performance 
       Timeline  
Grupo Aval 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aval are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Grupo Aval may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Cannabis Sativa 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Cannabis Sativa are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental indicators, Cannabis Sativa unveiled solid returns over the last few months and may actually be approaching a breakup point.

Grupo Aval and Cannabis Sativa Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grupo Aval and Cannabis Sativa

The main advantage of trading using opposite Grupo Aval and Cannabis Sativa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aval position performs unexpectedly, Cannabis Sativa 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 Cannabis Sativa will offset losses from the drop in Cannabis Sativa's long position.
The idea behind Grupo Aval and Cannabis Sativa 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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