Correlation Between Grupo Carso and Dairy Farm

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

Diversification Opportunities for Grupo Carso and Dairy Farm

0.17

Correlation Coefficient

Grupo Carso  Dairy Farm

Average diversification

The 3 months correlation between Grupo and Dairy is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International 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 Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of Grupo Carso i.e., Grupo Carso and Dairy Farm go up and down completely randomly.

Pair Corralation between Grupo Carso and Dairy Farm

Assuming the 90 days horizon Grupo Carso is expected to generate 9.31 times less return on investment than Dairy Farm. But when comparing it to its historical volatility, Grupo Carso SAB is 1.49 times less risky than Dairy Farm. It trades about 0.01 of its potential returns per unit of risk. Dairy Farm International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  205.00  in Dairy Farm International on December 26, 2024 and sell it today you would earn a total of  17.00  from holding Dairy Farm International or generate 8.29% return on investment over 90 days.

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

Grupo Carso SAB  vs.  Dairy Farm International

Grupo Carso SAB

Risk-Adjusted Performance

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Dairy Farm International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dairy Farm International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dairy Farm may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Grupo Carso and Dairy Farm

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

The idea behind Grupo Carso SAB and Dairy Farm International 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.