Correlation Between Acm Research and Fomento Economico

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

By analyzing existing cross correlation between Acm Research and Fomento Economico Mexicano, you can compare the effects of market volatilities on Acm Research and Fomento Economico 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 Acm Research with a short position of Fomento Economico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acm Research and Fomento Economico.

Diversification Opportunities for Acm Research and Fomento Economico

0.75

Correlation Coefficient

Acm Research  Fomento Economico

Poor diversification

The 3 months correlation between Acm and Fomento is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Acm Research and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico and Acm Research 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 Acm Research are associated (or correlated) with Fomento Economico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomento Economico has no effect on the direction of Acm Research i.e., Acm Research and Fomento Economico go up and down completely randomly.

Pair Corralation between Acm Research and Fomento Economico

Given the investment horizon of 90 days Acm Research is expected to generate 3.11 times more return on investment than Fomento Economico. However, Acm Research is 3.11 times more volatile than Fomento Economico Mexicano. It trades about 0.24 of its potential returns per unit of risk. Fomento Economico Mexicano is currently generating about 0.15 per unit of risk. If you would invest  1,491  in Acm Research on December 20, 2024 and sell it today you would earn a total of  1,431  from holding Acm Research or generate 95.98% return on investment over 90 days.

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

Acm Research  vs.  Fomento Economico Mexicano

Acm Research

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Acm Research are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, Acm Research reported solid returns over the last few months and may actually be approaching a breakup point.

Fomento Economico

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fomento Economico Mexicano are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Fomento Economico showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Acm Research and Fomento Economico

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

The idea behind Acm Research and Fomento Economico Mexicano 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.

Check out your portfolio center.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.