Correlation Between Grupo Televisa and Lumen Technologies

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

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

Diversification Opportunities for Grupo Televisa and Lumen Technologies

-0.2

Correlation Coefficient

Grupo Televisa  Lumen Technologies

Good diversification

The 3 months correlation between Grupo and Lumen is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Televisa SAB and Lumen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumen Technologies and Grupo Televisa 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 Televisa SAB are associated (or correlated) with Lumen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumen Technologies has no effect on the direction of Grupo Televisa i.e., Grupo Televisa and Lumen Technologies go up and down completely randomly.

Pair Corralation between Grupo Televisa and Lumen Technologies

Allowing for the 90-day total investment horizon Grupo Televisa SAB is expected to generate 0.68 times more return on investment than Lumen Technologies. However, Grupo Televisa SAB is 1.48 times less risky than Lumen Technologies. It trades about -0.04 of its potential returns per unit of risk. Lumen Technologies is currently generating about -0.07 per unit of risk. If you would invest  773.00  in Grupo Televisa SAB on January 31, 2024 and sell it today you would lose (457.00) from holding Grupo Televisa SAB or give up 59.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Grupo Televisa SAB  vs.  Lumen Technologies

Grupo Televisa SAB

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Televisa SAB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Grupo Televisa may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Lumen Technologies

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lumen Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Lumen Technologies is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Grupo Televisa and Lumen Technologies

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

The idea behind Grupo Televisa SAB and Lumen Technologies 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.