Correlation Between Grupo Mxico and GoMgA Resources

Can any of the company-specific risk be diversified away by investing in both Grupo Mxico and GoMgA Resources 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 Mxico and GoMgA Resources 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 GoMgA Resources, you can compare the effects of market volatilities on Grupo Mxico and GoMgA Resources 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 Mxico with a short position of GoMgA Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Mxico and GoMgA Resources.

Diversification Opportunities for Grupo Mxico and GoMgA Resources

-0.31

Correlation Coefficient

Grupo Mxico  GoMgA Resources

Very good diversification

The 3 months correlation between Grupo and GoMgA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Mxico SAB and GoMgA Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoMgA Resources and Grupo Mxico 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 GoMgA Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoMgA Resources has no effect on the direction of Grupo Mxico i.e., Grupo Mxico and GoMgA Resources go up and down completely randomly.

Pair Corralation between Grupo Mxico and GoMgA Resources

Assuming the 90 days horizon Grupo Mxico SAB is expected to generate 0.44 times more return on investment than GoMgA Resources. However, Grupo Mxico SAB is 2.29 times less risky than GoMgA Resources. It trades about 0.12 of its potential returns per unit of risk. GoMgA Resources is currently generating about -0.01 per unit of risk. If you would invest  489.00  in Grupo Mxico SAB on October 26, 2024 and sell it today you would earn a total of  21.00  from holding Grupo Mxico SAB or generate 4.29% return on investment over 90 days.

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

Grupo Mxico SAB  vs.  GoMgA Resources

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

GoMgA Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GoMgA Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GoMgA Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Mxico and GoMgA Resources

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

The idea behind Grupo Mxico SAB and GoMgA Resources 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.