Correlation Between Grupo Carso and Alfa SAB

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

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

Diversification Opportunities for Grupo Carso and Alfa SAB

0.15

Correlation Coefficient

Grupo Carso  Alfa SAB

Average diversification

The 3 months correlation between Grupo and Alfa is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and Alfa SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa SAB de and Grupo Carso 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 Carso SAB are associated (or correlated) with Alfa SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa SAB de has no effect on the direction of Grupo Carso i.e., Grupo Carso and Alfa SAB go up and down completely randomly.

Pair Corralation between Grupo Carso and Alfa SAB

Assuming the 90 days trading horizon Grupo Carso SAB is expected to generate 1.16 times more return on investment than Alfa SAB. However, Grupo Carso is 1.16 times more volatile than Alfa SAB de. It trades about 0.03 of its potential returns per unit of risk. Alfa SAB de is currently generating about 0.03 per unit of risk. If you would invest  8,816  in Grupo Carso SAB on September 27, 2024 and sell it today you would earn a total of  2,459  from holding Grupo Carso SAB or generate 27.89% return on investment over 90 days.

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

Grupo Carso SAB  vs.  Alfa SAB de

Grupo Carso SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Carso SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating 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.

Alfa SAB de

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa SAB de are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Alfa SAB is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Grupo Carso and Alfa SAB

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

The idea behind Grupo Carso SAB and Alfa 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..