Correlation Between Gentera SAB and FibraHotel

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

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

Diversification Opportunities for Gentera SAB and FibraHotel

0.38

Correlation Coefficient

Gentera SAB  FibraHotel

Weak diversification

The 3 months correlation between Gentera and FibraHotel is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Gentera SAB de and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel and Gentera SAB 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 Gentera SAB de are associated (or correlated) with FibraHotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibraHotel has no effect on the direction of Gentera SAB i.e., Gentera SAB and FibraHotel go up and down completely randomly.

Pair Corralation between Gentera SAB and FibraHotel

Assuming the 90 days trading horizon Gentera SAB is expected to generate 2.44 times less return on investment than FibraHotel. But when comparing it to its historical volatility, Gentera SAB de is 1.38 times less risky than FibraHotel. It trades about 0.07 of its potential returns per unit of risk. FibraHotel is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  811.00  in FibraHotel on September 25, 2024 and sell it today you would earn a total of  186.00  from holding FibraHotel or generate 22.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Gentera SAB de  vs.  FibraHotel

Gentera SAB de

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gentera SAB de are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Gentera SAB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FibraHotel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FibraHotel are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, FibraHotel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gentera SAB and FibraHotel

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

The idea behind Gentera SAB de and FibraHotel 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.