Correlation Between Financiera Independencia and Promotora

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

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

Diversification Opportunities for Financiera Independencia and Promotora

0.0

Correlation Coefficient

Financiera Independencia  Promotora

Pay attention - limited upside

The 3 months correlation between Financiera and Promotora is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Financiera Independencia SAB 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 Financiera Independencia 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 Financiera Independencia SAB 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 Financiera Independencia i.e., Financiera Independencia and Promotora go up and down completely randomly.

Pair Corralation between Financiera Independencia and Promotora

If you would invest  17,653  in Promotora y Operadora on August 31, 2024 and sell it today you would earn a total of  1,156  from holding Promotora y Operadora or generate 6.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Financiera Independencia SAB  vs.  Promotora y Operadora

Financiera Independencia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Financiera Independencia SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Financiera Independencia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Promotora y Operadora

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Promotora y Operadora are ranked lower than 5 (%) 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 December 2024.

Pair Trading with Financiera Independencia and Promotora

The main advantage of trading using opposite Financiera Independencia and Promotora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financiera Independencia 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 Financiera Independencia SAB 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.