Correlation Between Astra International and GMéxico Transportes

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

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

Diversification Opportunities for Astra International and GMéxico Transportes

-0.19

Correlation Coefficient

Astra International  GMéxico Transportes

Good diversification

The 3 months correlation between Astra and GMéxico is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Astra International Tbk 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 Astra International 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 Astra International Tbk are associated (or correlated) with GMéxico 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 Astra International i.e., Astra International and GMéxico Transportes go up and down completely randomly.

Pair Corralation between Astra International and GMéxico Transportes

Assuming the 90 days horizon Astra International Tbk is expected to under-perform the GMéxico Transportes. In addition to that, Astra International is 1.9 times more volatile than GMxico Transportes SAB. It trades about -0.02 of its total potential returns per unit of risk. GMxico Transportes SAB is currently generating about 0.06 per unit of volatility. If you would invest  160.00  in GMxico Transportes SAB on December 20, 2024 and sell it today you would earn a total of  7.00  from holding GMxico Transportes SAB or generate 4.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Astra International Tbk  vs.  GMxico Transportes SAB

Astra International Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astra International Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Astra International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

GMxico Transportes SAB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GMxico Transportes SAB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, GMéxico Transportes is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Astra International and GMéxico Transportes

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

The idea behind Astra International Tbk 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 Global Correlations module to find global opportunities by holding instruments from different markets.