Correlation Between Banco Del and Gruma SAB

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

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

Diversification Opportunities for Banco Del and Gruma SAB

-0.13

Correlation Coefficient

Banco Del  Gruma SAB

Good diversification

The 3 months correlation between Banco and Gruma is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Banco del Bajo and Gruma SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gruma SAB de and Banco Del 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 Banco del Bajo are associated (or correlated) with Gruma SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gruma SAB de has no effect on the direction of Banco Del i.e., Banco Del and Gruma SAB go up and down completely randomly.

Pair Corralation between Banco Del and Gruma SAB

Assuming the 90 days trading horizon Banco del Bajo is expected to generate 1.38 times more return on investment than Gruma SAB. However, Banco Del is 1.38 times more volatile than Gruma SAB de. It trades about 0.39 of its potential returns per unit of risk. Gruma SAB de is currently generating about 0.07 per unit of risk. If you would invest  4,195  in Banco del Bajo on October 26, 2024 and sell it today you would earn a total of  691.00  from holding Banco del Bajo or generate 16.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Banco del Bajo  vs.  Gruma SAB de

Banco del Bajo

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Banco del Bajo are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward-looking indicators, Banco Del may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Gruma SAB de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gruma SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Gruma SAB is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Banco Del and Gruma SAB

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

The idea behind Banco del Bajo and Gruma SAB de 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.