Correlation Between Grupo Mxico and Salazar Resources

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

Diversification Opportunities for Grupo Mxico and Salazar Resources

-0.03

Correlation Coefficient

Grupo Mxico  Salazar Resources

Good diversification

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

Pair Corralation between Grupo Mxico and Salazar Resources

Assuming the 90 days horizon Grupo Mxico is expected to generate 26.06 times less return on investment than Salazar Resources. But when comparing it to its historical volatility, Grupo Mxico SAB is 2.16 times less risky than Salazar Resources. It trades about 0.0 of its potential returns per unit of risk. Salazar Resources Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5.84  in Salazar Resources Limited on September 12, 2024 and sell it today you would earn a total of  0.16  from holding Salazar Resources Limited or generate 2.74% 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.  Salazar Resources Limited

Grupo Mxico SAB

Risk-Adjusted Performance

0 of 100

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 Mxico is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Salazar Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Salazar Resources Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Salazar Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Grupo Mxico and Salazar Resources

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

The idea behind Grupo Mxico SAB and Salazar Resources Limited 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.