Correlation Between Grupo Carso and El Puerto

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

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

Diversification Opportunities for Grupo Carso and El Puerto

0.09

Correlation Coefficient

Grupo Carso  El Puerto

Significant diversification

The 3 months correlation between Grupo and LIVEPOL1 is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and El Puerto de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Puerto de and Grupo Carso 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 Carso SAB are associated (or correlated) with El Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Puerto de has no effect on the direction of Grupo Carso i.e., Grupo Carso and El Puerto go up and down completely randomly.

Pair Corralation between Grupo Carso and El Puerto

Assuming the 90 days trading horizon Grupo Carso SAB is expected to generate 2.36 times more return on investment than El Puerto. However, Grupo Carso is 2.36 times more volatile than El Puerto de. It trades about -0.01 of its potential returns per unit of risk. El Puerto de is currently generating about -0.11 per unit of risk. If you would invest  11,901  in Grupo Carso SAB on September 14, 2024 and sell it today you would lose (274.00) from holding Grupo Carso SAB or give up 2.3% of portfolio value over 90 days.

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

Grupo Carso SAB  vs.  El Puerto de

Grupo Carso SAB

Risk-Adjusted Performance

0 of 100

Very Weak

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

El Puerto de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days El Puerto de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, El Puerto is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Grupo Carso and El Puerto

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

The idea behind Grupo Carso SAB and El Puerto de 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.