Correlation Between Grupo Bimbo and Kimberly Clark

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

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

Diversification Opportunities for Grupo Bimbo and Kimberly Clark

0.88

Correlation Coefficient

Grupo Bimbo  Kimberly Clark

Very poor diversification

The 3 months correlation between Grupo and Kimberly is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Bimbo SAB and Kimberly Clark de Mxico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimberly Clark de and Grupo Bimbo 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 Grupo Bimbo SAB are associated (or correlated) with Kimberly Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimberly Clark de has no effect on the direction of Grupo Bimbo i.e., Grupo Bimbo and Kimberly Clark go up and down completely randomly.

Pair Corralation between Grupo Bimbo and Kimberly Clark

Assuming the 90 days trading horizon Grupo Bimbo SAB is expected to generate 1.42 times more return on investment than Kimberly Clark. However, Grupo Bimbo is 1.42 times more volatile than Kimberly Clark de Mxico. It trades about -0.13 of its potential returns per unit of risk. Kimberly Clark de Mxico is currently generating about -0.2 per unit of risk. If you would invest  7,025  in Grupo Bimbo SAB on September 2, 2024 and sell it today you would lose (1,048) from holding Grupo Bimbo SAB or give up 14.92% of portfolio value over 90 days.

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

Grupo Bimbo SAB  vs.  Kimberly Clark de Mxico

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 weak performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Kimberly Clark de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kimberly Clark de Mxico has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Grupo Bimbo and Kimberly Clark

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

The idea behind Grupo Bimbo SAB and Kimberly Clark de Mxico 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.