Correlation Between Promotora and Fluor

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

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

Diversification Opportunities for Promotora and Fluor

0.33

Correlation Coefficient

Promotora  Fluor

Weak diversification

The 3 months correlation between Promotora and Fluor is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Promotora y Operadora and Fluor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluor and Promotora 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 Promotora y Operadora are associated (or correlated) with Fluor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluor has no effect on the direction of Promotora i.e., Promotora and Fluor go up and down completely randomly.

Pair Corralation between Promotora and Fluor

Assuming the 90 days trading horizon Promotora y Operadora is expected to under-perform the Fluor. In addition to that, Promotora is 1.13 times more volatile than Fluor. It trades about -0.02 of its total potential returns per unit of risk. Fluor is currently generating about 0.13 per unit of volatility. If you would invest  88,000  in Fluor on September 28, 2024 and sell it today you would earn a total of  10,527  from holding Fluor or generate 11.96% return on investment over 90 days.

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

Promotora y Operadora  vs.  Fluor

Promotora y Operadora

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fluor

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fluor are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Fluor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Promotora and Fluor

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

The idea behind Promotora y Operadora and Fluor 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.