Correlation Between Grupo Financiero and Polledo SA

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

By analyzing existing cross correlation between Grupo Financiero Galicia and Polledo SA, you can compare the effects of market volatilities on Grupo Financiero and Polledo SA 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 Financiero with a short position of Polledo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Financiero and Polledo SA.

Diversification Opportunities for Grupo Financiero and Polledo SA

-0.43

Correlation Coefficient

Grupo Financiero  Polledo SA

Very good diversification

The 3 months correlation between Grupo and Polledo is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Galicia and Polledo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polledo SA and Grupo Financiero 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 Financiero Galicia are associated (or correlated) with Polledo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polledo SA has no effect on the direction of Grupo Financiero i.e., Grupo Financiero and Polledo SA go up and down completely randomly.

Pair Corralation between Grupo Financiero and Polledo SA

Assuming the 90 days trading horizon Grupo Financiero Galicia is expected to generate 0.86 times more return on investment than Polledo SA. However, Grupo Financiero Galicia is 1.16 times less risky than Polledo SA. It trades about 0.16 of its potential returns per unit of risk. Polledo SA is currently generating about -0.13 per unit of risk. If you would invest  552,000  in Grupo Financiero Galicia on September 16, 2024 and sell it today you would earn a total of  124,000  from holding Grupo Financiero Galicia or generate 22.46% return on investment over 90 days.

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

Grupo Financiero Galicia  vs.  Polledo SA

Grupo Financiero Galicia

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Financiero Galicia are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Grupo Financiero sustained solid returns over the last few months and may actually be approaching a breakup point.

Polledo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polledo SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Grupo Financiero and Polledo SA

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

The idea behind Grupo Financiero Galicia and Polledo SA 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.