Correlation Between Grupo Bimbo and Jardine Matheson

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

Diversification Opportunities for Grupo Bimbo and Jardine Matheson

-0.5

Correlation Coefficient

Grupo Bimbo  Jardine Matheson

Very good diversification

The 3 months correlation between Grupo and Jardine is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Bimbo SAB and Jardine Matheson Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jardine Matheson Holdings 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 Jardine Matheson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jardine Matheson Holdings has no effect on the direction of Grupo Bimbo i.e., Grupo Bimbo and Jardine Matheson go up and down completely randomly.

Pair Corralation between Grupo Bimbo and Jardine Matheson

Assuming the 90 days horizon Grupo Bimbo SAB is expected to under-perform the Jardine Matheson. In addition to that, Grupo Bimbo is 1.18 times more volatile than Jardine Matheson Holdings. It trades about -0.04 of its total potential returns per unit of risk. Jardine Matheson Holdings is currently generating about 0.15 per unit of volatility. If you would invest  3,434  in Jardine Matheson Holdings on September 4, 2024 and sell it today you would earn a total of  866.00  from holding Jardine Matheson Holdings or generate 25.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Grupo Bimbo SAB  vs.  Jardine Matheson Holdings

Grupo Bimbo SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Bimbo SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Jardine Matheson Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jardine Matheson Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating essential indicators, Jardine Matheson reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Bimbo and Jardine Matheson

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

The idea behind Grupo Bimbo SAB and Jardine Matheson Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.