Correlation Between Grupo Carso and ITOCHU

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

Diversification Opportunities for Grupo Carso and ITOCHU

-0.3

Correlation Coefficient

Grupo Carso  ITOCHU

Very good diversification

The 3 months correlation between Grupo and ITOCHU is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and ITOCHU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITOCHU 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 ITOCHU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITOCHU has no effect on the direction of Grupo Carso i.e., Grupo Carso and ITOCHU go up and down completely randomly.

Pair Corralation between Grupo Carso and ITOCHU

Assuming the 90 days horizon Grupo Carso SAB is expected to under-perform the ITOCHU. In addition to that, Grupo Carso is 1.45 times more volatile than ITOCHU. It trades about -0.01 of its total potential returns per unit of risk. ITOCHU is currently generating about 0.03 per unit of volatility. If you would invest  3,655  in ITOCHU on December 2, 2024 and sell it today you would earn a total of  624.00  from holding ITOCHU or generate 17.07% return on investment over 90 days.

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

Grupo Carso SAB  vs.  ITOCHU

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.

ITOCHU

Risk-Adjusted Performance

Very Weak

Over the last 90 days ITOCHU 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 ITOCHU

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

The idea behind Grupo Carso SAB and ITOCHU 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.