Correlation Between Corporativo Fragua and Bolsa Mexicana

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

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

Diversification Opportunities for Corporativo Fragua and Bolsa Mexicana

-0.42

Correlation Coefficient

Corporativo Fragua  Bolsa Mexicana

Very good diversification

The 3 months correlation between Corporativo and Bolsa is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Corporativo Fragua 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 Corporativo Fragua 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 Corporativo Fragua 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 Corporativo Fragua i.e., Corporativo Fragua and Bolsa Mexicana go up and down completely randomly.

Pair Corralation between Corporativo Fragua and Bolsa Mexicana

Assuming the 90 days trading horizon Corporativo Fragua SAB is expected to generate 1.25 times more return on investment than Bolsa Mexicana. However, Corporativo Fragua is 1.25 times more volatile than Bolsa Mexicana de. It trades about 0.08 of its potential returns per unit of risk. Bolsa Mexicana de is currently generating about 0.0 per unit of risk. If you would invest  33,332  in Corporativo Fragua SAB on October 5, 2024 and sell it today you would earn a total of  31,047  from holding Corporativo Fragua SAB or generate 93.14% return on investment over 90 days.

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

Corporativo Fragua SAB  vs.  Bolsa Mexicana de

Corporativo Fragua SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corporativo Fragua SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators 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

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bolsa Mexicana de are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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 Corporativo Fragua and Bolsa Mexicana

The main advantage of trading using opposite Corporativo Fragua and Bolsa Mexicana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporativo Fragua 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 Corporativo Fragua 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.