Correlation Between Corporativo GBM and Value Grupo

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

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

Diversification Opportunities for Corporativo GBM and Value Grupo

-0.49

Correlation Coefficient

Corporativo GBM  Value Grupo

Very good diversification

The 3 months correlation between Corporativo and Value is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Corporativo GBM SAB and Value Grupo Financiero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Grupo Financiero and Corporativo GBM 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 GBM SAB are associated (or correlated) with Value Grupo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Grupo Financiero has no effect on the direction of Corporativo GBM i.e., Corporativo GBM and Value Grupo go up and down completely randomly.

Pair Corralation between Corporativo GBM and Value Grupo

Assuming the 90 days trading horizon Corporativo GBM SAB is expected to under-perform the Value Grupo. But the stock apears to be less risky and, when comparing its historical volatility, Corporativo GBM SAB is 2.59 times less risky than Value Grupo. The stock trades about -0.36 of its potential returns per unit of risk. The Value Grupo Financiero is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  8,590  in Value Grupo Financiero on October 13, 2024 and sell it today you would earn a total of  2,110  from holding Value Grupo Financiero or generate 24.56% return on investment over 90 days.

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

Corporativo GBM SAB  vs.  Value Grupo Financiero

Corporativo GBM SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corporativo GBM SAB 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 basic indicators remain fairly 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.

Value Grupo Financiero

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Value Grupo Financiero are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Value Grupo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Corporativo GBM and Value Grupo

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

The idea behind Corporativo GBM SAB and Value Grupo Financiero 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.