Correlation Between Grupo Financiero and Industrias

Can any of the company-specific risk be diversified away by investing in both Grupo Financiero and Industrias 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 Industrias 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 Industrias CH S, you can compare the effects of market volatilities on Grupo Financiero and Industrias 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 Industrias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Financiero and Industrias.

Diversification Opportunities for Grupo Financiero and Industrias

0.48

Correlation Coefficient

Grupo Financiero  Industrias

Very weak diversification

The 3 months correlation between Grupo and Industrias is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Inbursa and Industrias CH S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrias CH 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 Industrias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrias CH S has no effect on the direction of Grupo Financiero i.e., Grupo Financiero and Industrias go up and down completely randomly.

Pair Corralation between Grupo Financiero and Industrias

Assuming the 90 days trading horizon Grupo Financiero Inbursa is expected to generate 1.08 times more return on investment than Industrias. However, Grupo Financiero is 1.08 times more volatile than Industrias CH S. It trades about -0.02 of its potential returns per unit of risk. Industrias CH S is currently generating about -0.08 per unit of risk. If you would invest  4,409  in Grupo Financiero Inbursa on October 9, 2024 and sell it today you would lose (73.00) from holding Grupo Financiero Inbursa or give up 1.66% of portfolio value over 90 days.

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

Grupo Financiero Inbursa  vs.  Industrias CH 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 latest unsteady performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Industrias CH S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industrias CH S has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Grupo Financiero and Industrias

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

The idea behind Grupo Financiero Inbursa and Industrias CH 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.