Correlation Between APA and Grupo Herdez
Can any of the company-specific risk be diversified away by investing in both APA and Grupo Herdez 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 APA and Grupo Herdez into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APA Corporation and Grupo Herdez SAB, you can compare the effects of market volatilities on APA and Grupo Herdez 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 APA with a short position of Grupo Herdez. Check out your portfolio center. Please also check ongoing floating volatility patterns of APA and Grupo Herdez.
Diversification Opportunities for APA and Grupo Herdez
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between APA and Grupo is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding APA Corp. and Grupo Herdez SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Herdez SAB and APA 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 APA Corporation are associated (or correlated) with Grupo Herdez. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Herdez SAB has no effect on the direction of APA i.e., APA and Grupo Herdez go up and down completely randomly.
Pair Corralation between APA and Grupo Herdez
Assuming the 90 days trading horizon APA Corporation is expected to under-perform the Grupo Herdez. But the stock apears to be less risky and, when comparing its historical volatility, APA Corporation is 1.78 times less risky than Grupo Herdez. The stock trades about -0.22 of its potential returns per unit of risk. The Grupo Herdez SAB is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 4,470 in Grupo Herdez SAB on February 6, 2024 and sell it today you would earn a total of 415.00 from holding Grupo Herdez SAB or generate 9.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.0% |
Values | Daily Returns |
APA Corp. vs. Grupo Herdez SAB
Performance |
Timeline |
APA Corporation |
Grupo Herdez SAB |
APA and Grupo Herdez Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with APA and Grupo Herdez
The main advantage of trading using opposite APA and Grupo Herdez positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APA position performs unexpectedly, Grupo Herdez 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 Grupo Herdez will offset losses from the drop in Grupo Herdez's long position.APA vs. First Republic Bank | APA vs. Air Transport Services | APA vs. Samsung Electronics Co | APA vs. GMxico Transportes SAB |
Grupo Herdez vs. Genomma Lab Internacional | Grupo Herdez vs. Gruma SAB de | Grupo Herdez vs. El Puerto de |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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