Correlation Between BRF SA and Grupo Bimbo

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

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

Diversification Opportunities for BRF SA and Grupo Bimbo

0.43

Correlation Coefficient

BRF SA  Grupo Bimbo

Very weak diversification

The 3 months correlation between BRF and Grupo is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding BRF SA ADR and Grupo Bimbo SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Bimbo SAB and BRF SA 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 BRF SA ADR are associated (or correlated) with Grupo Bimbo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Bimbo SAB has no effect on the direction of BRF SA i.e., BRF SA and Grupo Bimbo go up and down completely randomly.

Pair Corralation between BRF SA and Grupo Bimbo

Given the investment horizon of 90 days BRF SA ADR is expected to under-perform the Grupo Bimbo. But the stock apears to be less risky and, when comparing its historical volatility, BRF SA ADR is 1.71 times less risky than Grupo Bimbo. The stock trades about -0.26 of its potential returns per unit of risk. The Grupo Bimbo SAB is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  290.00  in Grupo Bimbo SAB on December 4, 2024 and sell it today you would lose (19.00) from holding Grupo Bimbo SAB or give up 6.55% of portfolio value over 90 days.

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

BRF SA ADR  vs.  Grupo Bimbo SAB

BRF SA ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days BRF SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Grupo Bimbo SAB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grupo Bimbo SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Grupo Bimbo is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BRF SA and Grupo Bimbo

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

The idea behind BRF SA ADR and Grupo Bimbo SAB 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.