Correlation Between Swire Pacific and Grupo Bimbo

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

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

Diversification Opportunities for Swire Pacific and Grupo Bimbo

-0.4

Correlation Coefficient

Swire Pacific  Grupo Bimbo

Very good diversification

The 3 months correlation between Swire and Grupo is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Swire Pacific and Grupo Bimbo SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Bimbo SAB and Swire Pacific 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 Swire Pacific are associated (or correlated) with Grupo Bimbo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Bimbo SAB has no effect on the direction of Swire Pacific i.e., Swire Pacific and Grupo Bimbo go up and down completely randomly.

Pair Corralation between Swire Pacific and Grupo Bimbo

Assuming the 90 days horizon Swire Pacific is expected to generate 0.64 times more return on investment than Grupo Bimbo. However, Swire Pacific is 1.57 times less risky than Grupo Bimbo. It trades about 0.18 of its potential returns per unit of risk. Grupo Bimbo SAB is currently generating about -0.19 per unit of risk. If you would invest  844.00  in Swire Pacific on September 12, 2024 and sell it today you would earn a total of  50.00  from holding Swire Pacific or generate 5.92% return on investment over 90 days.

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

Swire Pacific  vs.  Grupo Bimbo SAB

Swire Pacific

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Swire Pacific are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Swire Pacific showed solid returns over the last few months and may actually be approaching a breakup point.

Grupo Bimbo SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Bimbo SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Swire Pacific and Grupo Bimbo

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

The idea behind Swire Pacific and Grupo Bimbo 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.

Check out your portfolio center.

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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .