Correlation Between International Business and GRUPO CARSO-A1

Can any of the company-specific risk be diversified away by investing in both International Business and GRUPO CARSO-A1 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 International Business and GRUPO CARSO-A1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between International Business Machines and GRUPO CARSO A1, you can compare the effects of market volatilities on International Business and GRUPO CARSO-A1 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 International Business with a short position of GRUPO CARSO-A1. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and GRUPO CARSO-A1.

Diversification Opportunities for International Business and GRUPO CARSO-A1

0.43

Correlation Coefficient

International Business  GRUPO CARSO-A1

Very weak diversification

The 3 months correlation between International and GRUPO is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and GRUPO CARSO A1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRUPO CARSO A1 and International Business 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 International Business Machines are associated (or correlated) with GRUPO CARSO-A1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRUPO CARSO A1 has no effect on the direction of International Business i.e., International Business and GRUPO CARSO-A1 go up and down completely randomly.

Pair Corralation between International Business and GRUPO CARSO-A1

Assuming the 90 days trading horizon International Business Machines is expected to generate 0.97 times more return on investment than GRUPO CARSO-A1. However, International Business Machines is 1.03 times less risky than GRUPO CARSO-A1. It trades about 0.07 of its potential returns per unit of risk. GRUPO CARSO A1 is currently generating about 0.03 per unit of risk. If you would invest  21,190  in International Business Machines on December 25, 2024 and sell it today you would earn a total of  1,800  from holding International Business Machines or generate 8.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

International Business Machine  vs.  GRUPO CARSO A1

International Business

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, International Business may actually be approaching a critical reversion point that can send shares even higher in April 2025.

GRUPO CARSO A1

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GRUPO CARSO A1 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GRUPO CARSO-A1 is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with International Business and GRUPO CARSO-A1

The main advantage of trading using opposite International Business and GRUPO CARSO-A1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, GRUPO CARSO-A1 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 CARSO-A1 will offset losses from the drop in GRUPO CARSO-A1's long position.

The idea behind International Business Machines and GRUPO CARSO A1 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.