Correlation Between Grupo Financiero and Grupo Gigante

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

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

Diversification Opportunities for Grupo Financiero and Grupo Gigante

-0.76

Correlation Coefficient

Grupo Financiero  Grupo Gigante

Pay attention - limited upside

The 3 months correlation between Grupo and Grupo is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Inbursa and Grupo Gigante S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Gigante S and Grupo Financiero 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 Financiero Inbursa are associated (or correlated) with Grupo Gigante. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Gigante S has no effect on the direction of Grupo Financiero i.e., Grupo Financiero and Grupo Gigante go up and down completely randomly.

Pair Corralation between Grupo Financiero and Grupo Gigante

Assuming the 90 days trading horizon Grupo Financiero Inbursa is expected to generate 2.11 times more return on investment than Grupo Gigante. However, Grupo Financiero is 2.11 times more volatile than Grupo Gigante S. It trades about 0.08 of its potential returns per unit of risk. Grupo Gigante S is currently generating about -0.22 per unit of risk. If you would invest  4,370  in Grupo Financiero Inbursa on October 20, 2024 and sell it today you would earn a total of  69.00  from holding Grupo Financiero Inbursa or generate 1.58% return on investment over 90 days.

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

Grupo Financiero Inbursa  vs.  Grupo Gigante S

Grupo Financiero Inbursa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Financiero Inbursa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Grupo Financiero is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Grupo Gigante S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Gigante S has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Grupo Gigante is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Grupo Financiero and Grupo Gigante

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

The idea behind Grupo Financiero Inbursa and Grupo Gigante S 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 Stocks Directory module to find actively traded stocks across global markets.