Correlation Between Fraser and Grupo Herdez

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

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

Diversification Opportunities for Fraser and Grupo Herdez

-0.46

Correlation Coefficient

Fraser  Grupo Herdez

Very good diversification

The 3 months correlation between Fraser and Grupo is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fraser and Neave and Grupo Herdez SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Herdez SAB and Fraser 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 Fraser and Neave are associated (or correlated) with Grupo Herdez. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Herdez SAB has no effect on the direction of Fraser i.e., Fraser and Grupo Herdez go up and down completely randomly.

Pair Corralation between Fraser and Grupo Herdez

Assuming the 90 days horizon Fraser and Neave is expected to generate 3.28 times more return on investment than Grupo Herdez. However, Fraser is 3.28 times more volatile than Grupo Herdez SAB. It trades about 0.12 of its potential returns per unit of risk. Grupo Herdez SAB is currently generating about -0.06 per unit of risk. If you would invest  91.00  in Fraser and Neave on September 4, 2024 and sell it today you would earn a total of  21.00  from holding Fraser and Neave or generate 23.08% return on investment over 90 days.

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

Fraser and Neave  vs.  Grupo Herdez SAB

Fraser and Neave

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fraser and Neave are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Fraser reported solid returns over the last few months and may actually be approaching a breakup point.

Grupo Herdez SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Herdez SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Grupo Herdez is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fraser and Grupo Herdez

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

The idea behind Fraser and Neave and Grupo Herdez 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.