Correlation Between Grupo Mexicano and GMxico Transportes

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

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

Diversification Opportunities for Grupo Mexicano and GMxico Transportes

0.17

Correlation Coefficient

Grupo Mexicano  GMxico Transportes

Average diversification

The 3 months correlation between Grupo and GMxico is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Mexicano de and GMxico Transportes SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMxico Transportes SAB and Grupo Mexicano 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 Mexicano de are associated (or correlated) with GMxico Transportes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMxico Transportes SAB has no effect on the direction of Grupo Mexicano i.e., Grupo Mexicano and GMxico Transportes go up and down completely randomly.

Pair Corralation between Grupo Mexicano and GMxico Transportes

Assuming the 90 days trading horizon Grupo Mexicano de is expected to under-perform the GMxico Transportes. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Mexicano de is 2.27 times less risky than GMxico Transportes. The stock trades about -0.26 of its potential returns per unit of risk. The GMxico Transportes SAB is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  3,433  in GMxico Transportes SAB on September 27, 2024 and sell it today you would lose (233.00) from holding GMxico Transportes SAB or give up 6.79% of portfolio value over 90 days.

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

Grupo Mexicano de  vs.  GMxico Transportes SAB

Grupo Mexicano de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Mexicano de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

GMxico Transportes SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMxico Transportes SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of 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.

Pair Trading with Grupo Mexicano and GMxico Transportes

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

The idea behind Grupo Mexicano de and GMxico Transportes 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.