Correlation Between Grupo KUO and Walmart

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

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

Diversification Opportunities for Grupo KUO and Walmart

0.22

Correlation Coefficient

Grupo KUO  Walmart

Modest diversification

The 3 months correlation between Grupo and Walmart is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Grupo KUO SAB and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Grupo KUO 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 KUO SAB are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Grupo KUO i.e., Grupo KUO and Walmart go up and down completely randomly.

Pair Corralation between Grupo KUO and Walmart

Assuming the 90 days trading horizon Grupo KUO is expected to generate 3.28 times less return on investment than Walmart. In addition to that, Grupo KUO is 1.24 times more volatile than Walmart. It trades about 0.05 of its total potential returns per unit of risk. Walmart is currently generating about 0.22 per unit of volatility. If you would invest  155,568  in Walmart on September 23, 2024 and sell it today you would earn a total of  29,432  from holding Walmart or generate 18.92% return on investment over 90 days.

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

Grupo KUO SAB  vs.  Walmart

Grupo KUO SAB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo KUO SAB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Grupo KUO is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Walmart

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Walmart showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo KUO and Walmart

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

The idea behind Grupo KUO SAB and Walmart 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.