Correlation Between Grupo Mxico and USS

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

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

Diversification Opportunities for Grupo Mxico and USS

0.64

Correlation Coefficient

Grupo Mxico  USS

Poor diversification

The 3 months correlation between Grupo and USS is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Mxico SAB and USS Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USS Co and Grupo Mxico 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 Mxico SAB are associated (or correlated) with USS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USS Co has no effect on the direction of Grupo Mxico i.e., Grupo Mxico and USS go up and down completely randomly.

Pair Corralation between Grupo Mxico and USS

Assuming the 90 days horizon Grupo Mxico SAB is expected to generate 9.12 times more return on investment than USS. However, Grupo Mxico is 9.12 times more volatile than USS Co. It trades about 0.2 of its potential returns per unit of risk. USS Co is currently generating about -0.12 per unit of risk. If you would invest  349.00  in Grupo Mxico SAB on September 23, 2024 and sell it today you would earn a total of  120.00  from holding Grupo Mxico SAB or generate 34.38% return on investment over 90 days.

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

Grupo Mxico SAB  vs.  USS Co

Grupo Mxico SAB

Risk-Adjusted Performance

9 of 100

OK

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

USS Co

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in USS Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, USS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Grupo Mxico and USS

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

The idea behind Grupo Mxico SAB and USS Co 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.