Correlation Between Grupo Industrial and Alphabet

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

Diversification Opportunities for Grupo Industrial and Alphabet

-0.66

Correlation Coefficient

Grupo Industrial  Alphabet

Excellent diversification

The 3 months correlation between Grupo and Alphabet is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Industrial Saltillo and Alphabet Inc Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class A 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class A has no effect on the direction of Grupo Industrial i.e., Grupo Industrial and Alphabet go up and down completely randomly.

Pair Corralation between Grupo Industrial and Alphabet

Assuming the 90 days trading horizon Grupo Industrial is expected to generate 1549.5 times less return on investment than Alphabet. But when comparing it to its historical volatility, Grupo Industrial Saltillo is 2.54 times less risky than Alphabet. It trades about 0.0 of its potential returns per unit of risk. Alphabet Inc Class A is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  354,500  in Alphabet Inc Class A on October 9, 2024 and sell it today you would earn a total of  42,499  from holding Alphabet Inc Class A or generate 11.99% return on investment over 90 days.

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

Grupo Industrial Saltillo  vs.  Alphabet Inc Class A

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 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.

Alphabet Class A

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class A are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Alphabet displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Industrial and Alphabet

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

The idea behind Grupo Industrial Saltillo and Alphabet Inc Class A 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.