Correlation Between Grupo Gigante and Bolsa Mexicana

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

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

Diversification Opportunities for Grupo Gigante and Bolsa Mexicana

0.23

Correlation Coefficient

Grupo Gigante  Bolsa Mexicana

Modest diversification

The 3 months correlation between Grupo and Bolsa is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Gigante S 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 Grupo Gigante 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 Gigante S 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 Grupo Gigante i.e., Grupo Gigante and Bolsa Mexicana go up and down completely randomly.

Pair Corralation between Grupo Gigante and Bolsa Mexicana

Assuming the 90 days trading horizon Grupo Gigante is expected to generate 9.48 times less return on investment than Bolsa Mexicana. But when comparing it to its historical volatility, Grupo Gigante S is 1.33 times less risky than Bolsa Mexicana. It trades about 0.01 of its potential returns per unit of risk. Bolsa Mexicana de is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,258  in Bolsa Mexicana de on September 23, 2024 and sell it today you would earn a total of  136.00  from holding Bolsa Mexicana de or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Grupo Gigante S  vs.  Bolsa Mexicana de

Grupo Gigante S

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Gigante S are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Grupo Gigante exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bolsa Mexicana de

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bolsa Mexicana de are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Bolsa Mexicana may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Grupo Gigante and Bolsa Mexicana

The main advantage of trading using opposite Grupo Gigante and Bolsa Mexicana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Gigante 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 Grupo Gigante S 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.