Correlation Between FMC and Grupo KUO

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

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

Diversification Opportunities for FMC and Grupo KUO

-0.64

Correlation Coefficient

FMC  Grupo KUO

Excellent diversification

The 3 months correlation between FMC and Grupo is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding FMC Corp. and Grupo KUO SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo KUO SAB and FMC 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 FMC Corporation are associated (or correlated) with Grupo KUO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo KUO SAB has no effect on the direction of FMC i.e., FMC and Grupo KUO go up and down completely randomly.

Pair Corralation between FMC and Grupo KUO

Considering the 90-day investment horizon FMC Corporation is expected to under-perform the Grupo KUO. In addition to that, FMC is 1.37 times more volatile than Grupo KUO SAB. It trades about -0.05 of its total potential returns per unit of risk. Grupo KUO SAB is currently generating about 0.01 per unit of volatility. If you would invest  4,634  in Grupo KUO SAB on October 21, 2024 and sell it today you would lose (34.00) from holding Grupo KUO SAB or give up 0.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

FMC Corp.  vs.  Grupo KUO SAB

FMC Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FMC Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Grupo KUO SAB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo KUO SAB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Grupo KUO showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FMC and Grupo KUO

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

The idea behind FMC Corporation and Grupo KUO 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.