Correlation Between Casa De and INVEX Controladora

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

By analyzing existing cross correlation between Casa de Bolsa and INVEX Controladora SAB, you can compare the effects of market volatilities on Casa De and INVEX Controladora 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 Casa De with a short position of INVEX Controladora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Casa De and INVEX Controladora.

Diversification Opportunities for Casa De and INVEX Controladora

0.15

Correlation Coefficient

Casa De  INVEX Controladora

Average diversification

The 3 months correlation between Casa and INVEX is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Casa de Bolsa and INVEX Controladora SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVEX Controladora SAB and Casa De 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 Casa de Bolsa are associated (or correlated) with INVEX Controladora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVEX Controladora SAB has no effect on the direction of Casa De i.e., Casa De and INVEX Controladora go up and down completely randomly.

Pair Corralation between Casa De and INVEX Controladora

Assuming the 90 days trading horizon Casa de Bolsa is expected to generate 0.63 times more return on investment than INVEX Controladora. However, Casa de Bolsa is 1.59 times less risky than INVEX Controladora. It trades about 0.13 of its potential returns per unit of risk. INVEX Controladora SAB is currently generating about 0.04 per unit of risk. If you would invest  2,850  in Casa de Bolsa on September 29, 2024 and sell it today you would earn a total of  86.00  from holding Casa de Bolsa or generate 3.02% return on investment over 90 days.

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

Casa de Bolsa  vs.  INVEX Controladora SAB

Casa de Bolsa

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Casa de Bolsa are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Casa De is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

INVEX Controladora SAB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INVEX Controladora SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, INVEX Controladora is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Casa De and INVEX Controladora

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

The idea behind Casa de Bolsa and INVEX Controladora SAB 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.