Correlation Between Grupo Bimbo and Very Good

Can any of the company-specific risk be diversified away by investing in both Grupo Bimbo and Very Good 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 Very Good 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 The Very Good, you can compare the effects of market volatilities on Grupo Bimbo and Very Good 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 Very Good. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Bimbo and Very Good.

Diversification Opportunities for Grupo Bimbo and Very Good

-0.34

Correlation Coefficient

Grupo Bimbo  Very Good

Very good diversification

The 3 months correlation between Grupo and Very is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Bimbo SAB and The Very Good in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Very Good 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 Very Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Very Good has no effect on the direction of Grupo Bimbo i.e., Grupo Bimbo and Very Good go up and down completely randomly.

Pair Corralation between Grupo Bimbo and Very Good

Assuming the 90 days horizon Grupo Bimbo SAB is expected to generate 0.1 times more return on investment than Very Good. However, Grupo Bimbo SAB is 10.18 times less risky than Very Good. It trades about -0.01 of its potential returns per unit of risk. The Very Good is currently generating about -0.16 per unit of risk. If you would invest  1,615  in Grupo Bimbo SAB on September 3, 2024 and sell it today you would lose (419.00) from holding Grupo Bimbo SAB or give up 25.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	3.42%
Values	Daily Returns

Grupo Bimbo SAB  vs.  The Very Good

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. In spite of latest conflicting 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.

Very Good

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Very Good has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Very Good is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Grupo Bimbo and Very Good

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

The idea behind Grupo Bimbo SAB and The Very Good 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.