Correlation Between Grupo Aval and Pulmatrix

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

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

Diversification Opportunities for Grupo Aval and Pulmatrix

0.7

Correlation Coefficient

Grupo Aval  Pulmatrix

Poor diversification

The 3 months correlation between Grupo and Pulmatrix is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval and Pulmatrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pulmatrix 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 Pulmatrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pulmatrix has no effect on the direction of Grupo Aval i.e., Grupo Aval and Pulmatrix go up and down completely randomly.

Pair Corralation between Grupo Aval and Pulmatrix

Given the investment horizon of 90 days Grupo Aval is expected to generate 29.9 times less return on investment than Pulmatrix. But when comparing it to its historical volatility, Grupo Aval is 7.9 times less risky than Pulmatrix. It trades about 0.05 of its potential returns per unit of risk. Pulmatrix is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  208.00  in Pulmatrix on September 1, 2024 and sell it today you would earn a total of  456.00  from holding Pulmatrix or generate 219.23% return on investment over 90 days.

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

Grupo Aval  vs.  Pulmatrix

Grupo Aval

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aval are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Grupo Aval is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pulmatrix

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pulmatrix are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Pulmatrix displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Aval and Pulmatrix

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

The idea behind Grupo Aval and Pulmatrix 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.