Correlation Between Alfa SAB and Grupo Gigante

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

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

Diversification Opportunities for Alfa SAB and Grupo Gigante

0.51

Correlation Coefficient

Alfa SAB  Grupo Gigante

Very weak diversification

The 3 months correlation between Alfa and Grupo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Alfa SAB de and Grupo Gigante S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Gigante S and Alfa SAB 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 Alfa SAB de are associated (or correlated) with Grupo Gigante. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Gigante S has no effect on the direction of Alfa SAB i.e., Alfa SAB and Grupo Gigante go up and down completely randomly.

Pair Corralation between Alfa SAB and Grupo Gigante

Assuming the 90 days trading horizon Alfa SAB de is expected to generate 1.81 times more return on investment than Grupo Gigante. However, Alfa SAB is 1.81 times more volatile than Grupo Gigante S. It trades about 0.09 of its potential returns per unit of risk. Grupo Gigante S is currently generating about -0.01 per unit of risk. If you would invest  1,493  in Alfa SAB de on December 25, 2024 and sell it today you would earn a total of  155.00  from holding Alfa SAB de or generate 10.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Alfa SAB de  vs.  Grupo Gigante S

Alfa SAB de

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa SAB de are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Alfa SAB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Grupo Gigante S

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grupo Gigante S has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Grupo Gigante is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alfa SAB and Grupo Gigante

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

The idea behind Alfa SAB de and Grupo Gigante S 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.