Correlation Between Fomento Economico and SBC Medical

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

By analyzing existing cross correlation between Fomento Economico Mexicano and SBC Medical Group, you can compare the effects of market volatilities on Fomento Economico and SBC Medical 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 Fomento Economico with a short position of SBC Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and SBC Medical.

Diversification Opportunities for Fomento Economico and SBC Medical

-0.35

Correlation Coefficient

Fomento Economico  SBC Medical

Very good diversification

The 3 months correlation between Fomento and SBC is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and SBC Medical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBC Medical Group and Fomento Economico 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 Fomento Economico Mexicano are associated (or correlated) with SBC Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBC Medical Group has no effect on the direction of Fomento Economico i.e., Fomento Economico and SBC Medical go up and down completely randomly.

Pair Corralation between Fomento Economico and SBC Medical

Considering the 90-day investment horizon Fomento Economico Mexicano is expected to generate 0.23 times more return on investment than SBC Medical. However, Fomento Economico Mexicano is 4.43 times less risky than SBC Medical. It trades about 0.15 of its potential returns per unit of risk. SBC Medical Group is currently generating about -0.04 per unit of risk. If you would invest  8,635  in Fomento Economico Mexicano on December 20, 2024 and sell it today you would earn a total of  1,308  from holding Fomento Economico Mexicano or generate 15.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.83%
Values	Daily Returns

Fomento Economico Mexicano  vs.  SBC Medical Group

Fomento Economico

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fomento Economico Mexicano are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Fomento Economico showed solid returns over the last few months and may actually be approaching a breakup point.

SBC Medical Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days SBC Medical Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Fomento Economico and SBC Medical

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

The idea behind Fomento Economico Mexicano and SBC Medical Group 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.