Correlation Between Grupo Mxico and Biogen

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

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

Diversification Opportunities for Grupo Mxico and Biogen

-0.07

Correlation Coefficient

Grupo Mxico  Biogen

Good diversification

The 3 months correlation between Grupo and Biogen is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Mxico SAB and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc and Grupo Mxico 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 Mxico SAB are associated (or correlated) with Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of Grupo Mxico i.e., Grupo Mxico and Biogen go up and down completely randomly.

Pair Corralation between Grupo Mxico and Biogen

Assuming the 90 days trading horizon Grupo Mxico SAB is expected to generate 1.0 times more return on investment than Biogen. However, Grupo Mxico is 1.0 times more volatile than Biogen Inc. It trades about 0.03 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.04 per unit of risk. If you would invest  9,499  in Grupo Mxico SAB on August 30, 2024 and sell it today you would earn a total of  546.00  from holding Grupo Mxico SAB or generate 5.75% return on investment over 90 days.

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

Grupo Mxico SAB  vs.  Biogen Inc

Grupo Mxico SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Mxico SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Grupo Mxico is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Biogen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biogen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Grupo Mxico and Biogen

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

The idea behind Grupo Mxico SAB and Biogen Inc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.