Correlation Between Grupo Profuturo and Financiera Independencia

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

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

Diversification Opportunities for Grupo Profuturo and Financiera Independencia

0.4

Correlation Coefficient

Grupo Profuturo  Financiera Independencia

Very weak diversification

The 3 months correlation between Grupo and Financiera is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Profuturo SAB and Financiera Independencia SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financiera Independencia and Grupo Profuturo 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 Profuturo SAB are associated (or correlated) with Financiera Independencia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financiera Independencia has no effect on the direction of Grupo Profuturo i.e., Grupo Profuturo and Financiera Independencia go up and down completely randomly.

Pair Corralation between Grupo Profuturo and Financiera Independencia

Assuming the 90 days trading horizon Grupo Profuturo SAB is expected to generate 0.42 times more return on investment than Financiera Independencia. However, Grupo Profuturo SAB is 2.41 times less risky than Financiera Independencia. It trades about -0.08 of its potential returns per unit of risk. Financiera Independencia SAB is currently generating about -0.16 per unit of risk. If you would invest  9,600  in Grupo Profuturo SAB on August 30, 2024 and sell it today you would lose (300.00) from holding Grupo Profuturo SAB or give up 3.12% of portfolio value over 90 days.

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

Grupo Profuturo SAB  vs.  Financiera Independencia SAB

Grupo Profuturo SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Profuturo SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Grupo Profuturo is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Grupo Profuturo and Financiera Independencia

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

The idea behind Grupo Profuturo SAB and Financiera Independencia 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 Anywhere module to track or share privately all of your investments from the convenience of any device.