Correlation Between Grupo Carso and Bannerman Resources

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

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

Diversification Opportunities for Grupo Carso and Bannerman Resources

0.33

Correlation Coefficient

Grupo Carso  Bannerman Resources

Weak diversification

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

Pair Corralation between Grupo Carso and Bannerman Resources

Assuming the 90 days horizon Grupo Carso SAB is expected to under-perform the Bannerman Resources. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Carso SAB is 1.86 times less risky than Bannerman Resources. The stock trades about -0.04 of its potential returns per unit of risk. The Bannerman Resources Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  196.00  in Bannerman Resources Limited on September 29, 2024 and sell it today you would lose (32.00) from holding Bannerman Resources Limited or give up 16.33% of portfolio value over 90 days.

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

Grupo Carso SAB  vs.  Bannerman Resources Limited

Grupo Carso SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Carso SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Grupo Carso is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Bannerman Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bannerman Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Grupo Carso and Bannerman Resources

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

The idea behind Grupo Carso SAB and Bannerman Resources Limited 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.