Correlation Between Grupo Carso and Pick N

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

Diversification Opportunities for Grupo Carso and Pick N

-0.08

Correlation Coefficient

Grupo Carso  Pick N

Good diversification

The 3 months correlation between Grupo and Pick is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and Pick n Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pick n Pay 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 Pick N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pick n Pay has no effect on the direction of Grupo Carso i.e., Grupo Carso and Pick N go up and down completely randomly.

Pair Corralation between Grupo Carso and Pick N

Assuming the 90 days horizon Grupo Carso SAB is expected to under-perform the Pick N. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Carso SAB is 1.01 times less risky than Pick N. The stock trades about -0.04 of its potential returns per unit of risk. The Pick n Pay is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  155.00  in Pick n Pay on November 29, 2024 and sell it today you would lose (5.00) from holding Pick n Pay or give up 3.23% of portfolio value over 90 days.

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

Grupo Carso SAB  vs.  Pick n Pay

Grupo Carso SAB

Risk-Adjusted Performance

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.

Pick n Pay

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pick n Pay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Pick N 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 Carso and Pick N

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

The idea behind Grupo Carso SAB and Pick n Pay 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.