Correlation Between Grupo Elektra and Bolsa Mexicana

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

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

Diversification Opportunities for Grupo Elektra and Bolsa Mexicana

-0.14

Correlation Coefficient

Grupo Elektra  Bolsa Mexicana

Good diversification

The 3 months correlation between Grupo and Bolsa is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Elektra SAB and Bolsa Mexicana de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolsa Mexicana de and Grupo Elektra 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 Elektra SAB are associated (or correlated) with Bolsa Mexicana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolsa Mexicana de has no effect on the direction of Grupo Elektra i.e., Grupo Elektra and Bolsa Mexicana go up and down completely randomly.

Pair Corralation between Grupo Elektra and Bolsa Mexicana

Assuming the 90 days trading horizon Grupo Elektra SAB is expected to under-perform the Bolsa Mexicana. In addition to that, Grupo Elektra is 5.02 times more volatile than Bolsa Mexicana de. It trades about -0.07 of its total potential returns per unit of risk. Bolsa Mexicana de is currently generating about -0.03 per unit of volatility. If you would invest  3,343  in Bolsa Mexicana de on October 20, 2024 and sell it today you would lose (151.00) from holding Bolsa Mexicana de or give up 4.52% of portfolio value over 90 days.

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

Grupo Elektra SAB  vs.  Bolsa Mexicana de

Grupo Elektra SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Elektra SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bolsa Mexicana de

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Grupo Elektra and Bolsa Mexicana

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

The idea behind Grupo Elektra SAB and Bolsa Mexicana 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.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.