Correlation Between Grupo Bimbo and Agro Capital

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

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

Diversification Opportunities for Grupo Bimbo and Agro Capital

-0.41

Correlation Coefficient

Grupo Bimbo  Agro Capital

Very good diversification

The 3 months correlation between Grupo and Agro is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Bimbo SAB and Agro Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agro Capital Management and Grupo Bimbo 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 Bimbo SAB are associated (or correlated) with Agro Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agro Capital Management has no effect on the direction of Grupo Bimbo i.e., Grupo Bimbo and Agro Capital go up and down completely randomly.

Pair Corralation between Grupo Bimbo and Agro Capital

Assuming the 90 days horizon Grupo Bimbo is expected to generate 19.51 times less return on investment than Agro Capital. But when comparing it to its historical volatility, Grupo Bimbo SAB is 5.71 times less risky than Agro Capital. It trades about 0.04 of its potential returns per unit of risk. Agro Capital Management is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2.25  in Agro Capital Management on December 27, 2024 and sell it today you would earn a total of  1.89  from holding Agro Capital Management or generate 84.0% return on investment over 90 days.

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

Grupo Bimbo SAB  vs.  Agro Capital Management

Grupo Bimbo SAB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Bimbo SAB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Grupo Bimbo may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Agro Capital Management

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agro Capital Management are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Agro Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Bimbo and Agro Capital

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

The idea behind Grupo Bimbo SAB and Agro Capital Management 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.