Correlation Between GMxico Transportes and Ternium SA
Can any of the company-specific risk be diversified away by investing in both GMxico Transportes and Ternium SA 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 Ternium SA 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 Ternium SA, you can compare the effects of market volatilities on GMxico Transportes and Ternium SA 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 Ternium SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMxico Transportes and Ternium SA.
Diversification Opportunities for GMxico Transportes and Ternium SA
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GMxico and Ternium is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding GMxico Transportes SAB and Ternium SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ternium SA 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 Ternium SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ternium SA has no effect on the direction of GMxico Transportes i.e., GMxico Transportes and Ternium SA go up and down completely randomly.
Pair Corralation between GMxico Transportes and Ternium SA
Assuming the 90 days trading horizon GMxico Transportes SAB is expected to generate 0.81 times more return on investment than Ternium SA. However, GMxico Transportes SAB is 1.23 times less risky than Ternium SA. It trades about 0.04 of its potential returns per unit of risk. Ternium SA is currently generating about -0.12 per unit of risk. If you would invest 3,146 in GMxico Transportes SAB on October 3, 2024 and sell it today you would earn a total of 110.00 from holding GMxico Transportes SAB or generate 3.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
GMxico Transportes SAB vs. Ternium SA
Performance |
Timeline |
GMxico Transportes SAB |
Ternium SA |
GMxico Transportes and Ternium SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GMxico Transportes and Ternium SA
The main advantage of trading using opposite GMxico Transportes and Ternium SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMxico Transportes position performs unexpectedly, Ternium SA 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 Ternium SA will offset losses from the drop in Ternium SA's long position.GMxico Transportes vs. Prudential Financial | GMxico Transportes vs. Grupo Carso SAB | GMxico Transportes vs. Monster Beverage Corp | GMxico Transportes vs. Southwest Airlines |
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Check out your portfolio center.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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