Correlation Between Kuya Silver and BBB Foods

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

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

Diversification Opportunities for Kuya Silver and BBB Foods

-0.3

Correlation Coefficient

Kuya Silver  BBB Foods

Very good diversification

The 3 months correlation between Kuya and BBB is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Kuya Silver and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods and Kuya Silver 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 Kuya Silver are associated (or correlated) with BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Kuya Silver i.e., Kuya Silver and BBB Foods go up and down completely randomly.

Pair Corralation between Kuya Silver and BBB Foods

Assuming the 90 days horizon Kuya Silver is expected to generate 2.14 times more return on investment than BBB Foods. However, Kuya Silver is 2.14 times more volatile than BBB Foods. It trades about 0.12 of its potential returns per unit of risk. BBB Foods is currently generating about -0.09 per unit of risk. If you would invest  18.00  in Kuya Silver on December 18, 2024 and sell it today you would earn a total of  6.00  from holding Kuya Silver or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Kuya Silver  vs.  BBB Foods

Kuya Silver

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kuya Silver are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kuya Silver reported solid returns over the last few months and may actually be approaching a breakup point.

BBB Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days BBB Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kuya Silver and BBB Foods

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

The idea behind Kuya Silver and BBB Foods 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.