Correlation Between Grupo Industrial and Grupo Mexicano

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

Diversification Opportunities for Grupo Industrial and Grupo Mexicano

0.05

Correlation Coefficient

Grupo Industrial  Grupo Mexicano

Significant diversification

The 3 months correlation between Grupo and Grupo is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Industrial Saltillo and Grupo Mexicano de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Mexicano 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 Grupo Mexicano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Mexicano de has no effect on the direction of Grupo Industrial i.e., Grupo Industrial and Grupo Mexicano go up and down completely randomly.

Pair Corralation between Grupo Industrial and Grupo Mexicano

Assuming the 90 days trading horizon Grupo Industrial Saltillo is expected to generate 3.19 times more return on investment than Grupo Mexicano. However, Grupo Industrial is 3.19 times more volatile than Grupo Mexicano de. It trades about 0.0 of its potential returns per unit of risk. Grupo Mexicano de is currently generating about -0.17 per unit of risk. If you would invest  1,670  in Grupo Industrial Saltillo on December 22, 2024 and sell it today you would lose (4.00) from holding Grupo Industrial Saltillo or give up 0.24% of portfolio value over 90 days.

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

Grupo Industrial Saltillo  vs.  Grupo Mexicano de

Grupo Industrial Saltillo

Risk-Adjusted Performance

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 somewhat strong basic indicators, Grupo Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Grupo Mexicano de

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grupo Mexicano de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Grupo Mexicano is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grupo Industrial and Grupo Mexicano

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

The idea behind Grupo Industrial Saltillo and Grupo Mexicano 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.