Correlation Between 00165CAP9 and Fomento Economico

Can any of the company-specific risk be diversified away by investing in both 00165CAP9 and Fomento Economico 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 00165CAP9 and Fomento Economico into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMC ENTMT HLDGS and Fomento Economico Mexicano, you can compare the effects of market volatilities on 00165CAP9 and Fomento Economico 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 00165CAP9 with a short position of Fomento Economico. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00165CAP9 and Fomento Economico.

Diversification Opportunities for 00165CAP9 and Fomento Economico

-0.11

Correlation Coefficient

00165CAP9  Fomento Economico

Good diversification

The 3 months correlation between 00165CAP9 and Fomento is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding AMC ENTMT HLDGS and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico and 00165CAP9 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 AMC ENTMT HLDGS are associated (or correlated) with Fomento Economico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomento Economico has no effect on the direction of 00165CAP9 i.e., 00165CAP9 and Fomento Economico go up and down completely randomly.

Pair Corralation between 00165CAP9 and Fomento Economico

Assuming the 90 days trading horizon AMC ENTMT HLDGS is expected to under-perform the Fomento Economico. But the bond apears to be less risky and, when comparing its historical volatility, AMC ENTMT HLDGS is 2.98 times less risky than Fomento Economico. The bond trades about -0.12 of its potential returns per unit of risk. The Fomento Economico Mexicano is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  8,657  in Fomento Economico Mexicano on December 1, 2024 and sell it today you would earn a total of  751.00  from holding Fomento Economico Mexicano or generate 8.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	51.67%
Values	Daily Returns

AMC ENTMT HLDGS  vs.  Fomento Economico Mexicano

AMC ENTMT HLDGS

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMC ENTMT HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00165CAP9 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fomento Economico

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fomento Economico Mexicano are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Fomento Economico may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with 00165CAP9 and Fomento Economico

The main advantage of trading using opposite 00165CAP9 and Fomento Economico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00165CAP9 position performs unexpectedly, Fomento Economico 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 Fomento Economico will offset losses from the drop in Fomento Economico's long position.

The idea behind AMC ENTMT HLDGS and Fomento Economico Mexicano 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 Transaction History module to view history of all your transactions and understand their impact on performance.