Correlation Between Grupo Comercial and Promotora

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

By analyzing existing cross correlation between Grupo Comercial Chedraui and Promotora y Operadora, you can compare the effects of market volatilities on Grupo Comercial and Promotora 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 Comercial with a short position of Promotora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Comercial and Promotora.

Diversification Opportunities for Grupo Comercial and Promotora

-0.28

Correlation Coefficient

Grupo Comercial  Promotora

Very good diversification

The 3 months correlation between Grupo and Promotora is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Comercial Chedraui and Promotora y Operadora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Promotora y Operadora and Grupo Comercial 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 Comercial Chedraui are associated (or correlated) with Promotora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Promotora y Operadora has no effect on the direction of Grupo Comercial i.e., Grupo Comercial and Promotora go up and down completely randomly.

Pair Corralation between Grupo Comercial and Promotora

Assuming the 90 days trading horizon Grupo Comercial Chedraui is expected to under-perform the Promotora. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Comercial Chedraui is 1.11 times less risky than Promotora. The stock trades about -0.11 of its potential returns per unit of risk. The Promotora y Operadora is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  17,308  in Promotora y Operadora on September 13, 2024 and sell it today you would earn a total of  1,314  from holding Promotora y Operadora or generate 7.59% return on investment over 90 days.

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

Grupo Comercial Chedraui  vs.  Promotora y Operadora

Grupo Comercial Chedraui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Comercial Chedraui has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Promotora y Operadora

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Promotora y Operadora are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Promotora may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Grupo Comercial and Promotora

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

The idea behind Grupo Comercial Chedraui and Promotora y Operadora 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.