Correlation Between Grupo Mxico and Grupo Carso

Can any of the company-specific risk be diversified away by investing in both Grupo Mxico and Grupo Carso 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 Grupo Carso 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 Grupo Carso SAB, you can compare the effects of market volatilities on Grupo Mxico and Grupo Carso 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 Grupo Carso. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Mxico and Grupo Carso.

Diversification Opportunities for Grupo Mxico and Grupo Carso

0.53

Correlation Coefficient

Grupo Mxico  Grupo Carso

Very weak diversification

The 3 months correlation between Grupo and Grupo is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Mxico SAB and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB 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 Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of Grupo Mxico i.e., Grupo Mxico and Grupo Carso go up and down completely randomly.

Pair Corralation between Grupo Mxico and Grupo Carso

Assuming the 90 days trading horizon Grupo Mxico SAB is expected to generate 1.05 times more return on investment than Grupo Carso. However, Grupo Mxico is 1.05 times more volatile than Grupo Carso SAB. It trades about -0.01 of its potential returns per unit of risk. Grupo Carso SAB is currently generating about -0.05 per unit of risk. If you would invest  9,997  in Grupo Mxico SAB on September 27, 2024 and sell it today you would lose (77.00) from holding Grupo Mxico SAB or give up 0.77% of portfolio value over 90 days.

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

Grupo Mxico SAB  vs.  Grupo Carso SAB

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 latest weak performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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.

Pair Trading with Grupo Mxico and Grupo Carso

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

The idea behind Grupo Mxico SAB and Grupo Carso 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.