Correlation Between GMxico Transportes and Grupo Industrial

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

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

Diversification Opportunities for GMxico Transportes and Grupo Industrial

0.01

Correlation Coefficient

GMxico Transportes  Grupo Industrial

Significant diversification

The 3 months correlation between GMxico and Grupo is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding GMxico Transportes SAB and Grupo Industrial Saltillo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Industrial Saltillo and GMxico Transportes 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 GMxico Transportes SAB are associated (or correlated) with Grupo Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Industrial Saltillo has no effect on the direction of GMxico Transportes i.e., GMxico Transportes and Grupo Industrial go up and down completely randomly.

Pair Corralation between GMxico Transportes and Grupo Industrial

Assuming the 90 days trading horizon GMxico Transportes SAB is expected to under-perform the Grupo Industrial. In addition to that, GMxico Transportes is 1.51 times more volatile than Grupo Industrial Saltillo. It trades about -0.11 of its total potential returns per unit of risk. Grupo Industrial Saltillo is currently generating about 0.25 per unit of volatility. If you would invest  1,670  in Grupo Industrial Saltillo on October 26, 2024 and sell it today you would earn a total of  90.00  from holding Grupo Industrial Saltillo or generate 5.39% return on investment over 90 days.

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

GMxico Transportes SAB  vs.  Grupo Industrial Saltillo

GMxico Transportes SAB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GMxico Transportes SAB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, GMxico Transportes is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Grupo Industrial Saltillo

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Industrial Saltillo are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Grupo Industrial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GMxico Transportes and Grupo Industrial

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

The idea behind GMxico Transportes SAB and Grupo Industrial Saltillo 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.