Correlation Between Grupo Televisa and Bright Lights

Can any of the company-specific risk be diversified away by investing in both Grupo Televisa and Bright Lights 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 Bright Lights 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 Bright Lights Acquisition, you can compare the effects of market volatilities on Grupo Televisa and Bright Lights 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 Bright Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Televisa and Bright Lights.

Diversification Opportunities for Grupo Televisa and Bright Lights

-0.43

Correlation Coefficient

Grupo Televisa  Bright Lights

Very good diversification

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

Pair Corralation between Grupo Televisa and Bright Lights

Assuming the 90 days horizon Grupo Televisa SAB is expected to generate 0.47 times more return on investment than Bright Lights. However, Grupo Televisa SAB is 2.13 times less risky than Bright Lights. It trades about -0.04 of its potential returns per unit of risk. Bright Lights Acquisition is currently generating about -0.08 per unit of risk. If you would invest  185.00  in Grupo Televisa SAB on January 20, 2024 and sell it today you would lose (120.00) from holding Grupo Televisa SAB or give up 64.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	35.04%
Values	Daily Returns

Grupo Televisa SAB  vs.  Bright Lights Acquisition

Grupo Televisa SAB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Televisa SAB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Grupo Televisa reported solid returns over the last few months and may actually be approaching a breakup point.

Bright Lights Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Grupo Televisa and Bright Lights

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

The idea behind Grupo Televisa SAB and Bright Lights Acquisition 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.