Correlation Between Grupo Aval and Premium Nickel

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

By analyzing existing cross correlation between Grupo Aval and Premium Nickel Resources, you can compare the effects of market volatilities on Grupo Aval and Premium Nickel 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 Premium Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aval and Premium Nickel.

Diversification Opportunities for Grupo Aval and Premium Nickel

-0.35

Correlation Coefficient

Grupo Aval  Premium Nickel

Very good diversification

The 3 months correlation between Grupo and Premium is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval and Premium Nickel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Nickel Resources 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 Premium Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Nickel Resources has no effect on the direction of Grupo Aval i.e., Grupo Aval and Premium Nickel go up and down completely randomly.

Pair Corralation between Grupo Aval and Premium Nickel

Given the investment horizon of 90 days Grupo Aval is expected to generate 0.35 times more return on investment than Premium Nickel. However, Grupo Aval is 2.87 times less risky than Premium Nickel. It trades about 0.02 of its potential returns per unit of risk. Premium Nickel Resources is currently generating about -0.05 per unit of risk. If you would invest  202.00  in Grupo Aval on September 15, 2024 and sell it today you would earn a total of  12.00  from holding Grupo Aval or generate 5.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Grupo Aval  vs.  Premium Nickel Resources

Grupo Aval

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aval are ranked lower than 6 (%) 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.

Premium Nickel Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Premium Nickel Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Premium Nickel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Grupo Aval and Premium Nickel

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

The idea behind Grupo Aval and Premium Nickel Resources 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 Global Correlations module to find global opportunities by holding instruments from different markets.