Correlation Between Sony and Gruma SAB

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

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

Diversification Opportunities for Sony and Gruma SAB

-0.74

Correlation Coefficient

Sony  Gruma SAB

Pay attention - limited upside

The 3 months correlation between Sony and Gruma is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and Gruma SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gruma SAB de and Sony 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 Sony Group are associated (or correlated) with Gruma SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gruma SAB de has no effect on the direction of Sony i.e., Sony and Gruma SAB go up and down completely randomly.

Pair Corralation between Sony and Gruma SAB

Assuming the 90 days trading horizon Sony Group is expected to generate 1.1 times more return on investment than Gruma SAB. However, Sony is 1.1 times more volatile than Gruma SAB de. It trades about 0.21 of its potential returns per unit of risk. Gruma SAB de is currently generating about -0.08 per unit of risk. If you would invest  34,800  in Sony Group on October 23, 2024 and sell it today you would earn a total of  7,700  from holding Sony Group or generate 22.13% return on investment over 90 days.

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

Sony Group  vs.  Gruma SAB de

Sony Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Sony displayed solid returns over the last few months and may actually be approaching a breakup point.

Gruma SAB de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gruma SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Sony and Gruma SAB

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

The idea behind Sony Group and Gruma SAB de 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.