Correlation Between Grupo Industrial and Cydsa SAB

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

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

Diversification Opportunities for Grupo Industrial and Cydsa SAB

0.03

Correlation Coefficient

Grupo Industrial  Cydsa SAB

Significant diversification

The 3 months correlation between Grupo and Cydsa is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Industrial Saltillo and Cydsa SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cydsa SAB de and Grupo Industrial 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 Industrial Saltillo are associated (or correlated) with Cydsa SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cydsa SAB de has no effect on the direction of Grupo Industrial i.e., Grupo Industrial and Cydsa SAB go up and down completely randomly.

Pair Corralation between Grupo Industrial and Cydsa SAB

Assuming the 90 days trading horizon Grupo Industrial Saltillo is expected to under-perform the Cydsa SAB. In addition to that, Grupo Industrial is 1.4 times more volatile than Cydsa SAB de. It trades about -0.07 of its total potential returns per unit of risk. Cydsa SAB de is currently generating about 0.1 per unit of volatility. If you would invest  1,610  in Cydsa SAB de on October 8, 2024 and sell it today you would earn a total of  110.00  from holding Cydsa SAB de or generate 6.83% return on investment over 90 days.

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

Grupo Industrial Saltillo  vs.  Cydsa SAB de

Grupo Industrial Saltillo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Industrial Saltillo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite 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.

Cydsa SAB de

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cydsa SAB de are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cydsa SAB may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Grupo Industrial and Cydsa SAB

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

The idea behind Grupo Industrial Saltillo and Cydsa SAB 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.