Correlation Between Nemak S and GMxico Transportes

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

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

Diversification Opportunities for Nemak S and GMxico Transportes

0.49

Correlation Coefficient

Nemak S  GMxico Transportes

Very weak diversification

The 3 months correlation between Nemak and GMxico is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Nemak S A and GMxico Transportes SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMxico Transportes SAB and Nemak S 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 Nemak S A are associated (or correlated) with GMxico Transportes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMxico Transportes SAB has no effect on the direction of Nemak S i.e., Nemak S and GMxico Transportes go up and down completely randomly.

Pair Corralation between Nemak S and GMxico Transportes

Assuming the 90 days trading horizon Nemak S A is expected to under-perform the GMxico Transportes. In addition to that, Nemak S is 1.63 times more volatile than GMxico Transportes SAB. It trades about -0.07 of its total potential returns per unit of risk. GMxico Transportes SAB is currently generating about -0.01 per unit of volatility. If you would invest  3,603  in GMxico Transportes SAB on October 14, 2024 and sell it today you would lose (453.00) from holding GMxico Transportes SAB or give up 12.57% of portfolio value over 90 days.

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

Nemak S A  vs.  GMxico Transportes SAB

Nemak S A

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nemak S A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Nemak S may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GMxico Transportes SAB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GMxico Transportes SAB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, GMxico Transportes is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nemak S and GMxico Transportes

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

The idea behind Nemak S A and GMxico Transportes 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.