Correlation Between IPC MEXICO and Grupo KUO

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

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

Diversification Opportunities for IPC MEXICO and Grupo KUO

-0.36

Correlation Coefficient

IPC MEXICO  Grupo KUO

Very good diversification

The 3 months correlation between IPC and Grupo is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding IPC MEXICO and Grupo KUO SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo KUO SAB and IPC MEXICO 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 IPC MEXICO are associated (or correlated) with Grupo KUO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo KUO SAB has no effect on the direction of IPC MEXICO i.e., IPC MEXICO and Grupo KUO go up and down completely randomly.

Pair Corralation between IPC MEXICO and Grupo KUO

If you would invest  4,931,662  in IPC MEXICO on October 23, 2024 and sell it today you would earn a total of  95,242  from holding IPC MEXICO or generate 1.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

IPC MEXICO  vs.  Grupo KUO SAB

Pair Trading with IPC MEXICO and Grupo KUO

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

The idea behind IPC MEXICO and Grupo KUO SAB 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.