Correlation Between Grupo México and Adventus Mining

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

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

Diversification Opportunities for Grupo México and Adventus Mining

0.42

Correlation Coefficient

Grupo México  Adventus Mining

Very weak diversification

The 3 months correlation between Grupo and Adventus is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Mxico SAB and Adventus Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adventus Mining and Grupo México 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 Mxico SAB are associated (or correlated) with Adventus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adventus Mining has no effect on the direction of Grupo México i.e., Grupo México and Adventus Mining go up and down completely randomly.

Pair Corralation between Grupo México and Adventus Mining

Assuming the 90 days horizon Grupo Mxico SAB is expected to generate 0.56 times more return on investment than Adventus Mining. However, Grupo Mxico SAB is 1.8 times less risky than Adventus Mining. It trades about 0.04 of its potential returns per unit of risk. Adventus Mining is currently generating about 0.02 per unit of risk. If you would invest  369.00  in Grupo Mxico SAB on September 4, 2024 and sell it today you would earn a total of  134.00  from holding Grupo Mxico SAB or generate 36.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.43%
Values	Daily Returns

Grupo Mxico SAB  vs.  Adventus Mining

Grupo Mxico SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Mxico SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Grupo México is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Adventus Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adventus Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Adventus Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Grupo México and Adventus Mining

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

The idea behind Grupo Mxico SAB and Adventus Mining 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.