Correlation Between Grupo Comercial and Gentera SAB

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

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

Diversification Opportunities for Grupo Comercial and Gentera SAB

-0.84

Correlation Coefficient

Grupo Comercial  Gentera SAB

Pay attention - limited upside

The 3 months correlation between Grupo and Gentera is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Comercial Chedraui and Gentera SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentera SAB de and Grupo Comercial 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 Comercial Chedraui are associated (or correlated) with Gentera SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentera SAB de has no effect on the direction of Grupo Comercial i.e., Grupo Comercial and Gentera SAB go up and down completely randomly.

Pair Corralation between Grupo Comercial and Gentera SAB

Assuming the 90 days trading horizon Grupo Comercial Chedraui is expected to generate 0.67 times more return on investment than Gentera SAB. However, Grupo Comercial Chedraui is 1.49 times less risky than Gentera SAB. It trades about 0.08 of its potential returns per unit of risk. Gentera SAB de is currently generating about 0.05 per unit of risk. If you would invest  9,351  in Grupo Comercial Chedraui on September 12, 2024 and sell it today you would earn a total of  4,029  from holding Grupo Comercial Chedraui or generate 43.09% return on investment over 90 days.

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

Grupo Comercial Chedraui  vs.  Gentera SAB de

Grupo Comercial Chedraui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Comercial Chedraui has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Gentera SAB de

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gentera SAB de are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gentera SAB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Comercial and Gentera SAB

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

The idea behind Grupo Comercial Chedraui and Gentera 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.