Correlation Between Grupo Profuturo and Nemak S

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

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

Diversification Opportunities for Grupo Profuturo and Nemak S

0.19

Correlation Coefficient

Grupo Profuturo  Nemak S

Average diversification

The 3 months correlation between Grupo and Nemak is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Profuturo SAB and Nemak S A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nemak S A and Grupo Profuturo 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 Profuturo SAB are associated (or correlated) with Nemak S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nemak S A has no effect on the direction of Grupo Profuturo i.e., Grupo Profuturo and Nemak S go up and down completely randomly.

Pair Corralation between Grupo Profuturo and Nemak S

Assuming the 90 days trading horizon Grupo Profuturo SAB is expected to generate 0.5 times more return on investment than Nemak S. However, Grupo Profuturo SAB is 1.99 times less risky than Nemak S. It trades about 0.07 of its potential returns per unit of risk. Nemak S A is currently generating about -0.06 per unit of risk. If you would invest  7,426  in Grupo Profuturo SAB on September 12, 2024 and sell it today you would earn a total of  2,574  from holding Grupo Profuturo SAB or generate 34.66% return on investment over 90 days.

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

Grupo Profuturo SAB  vs.  Nemak S A

Grupo Profuturo SAB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Profuturo SAB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Grupo Profuturo is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Nemak S A

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nemak S A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, Nemak S may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Grupo Profuturo and Nemak S

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

The idea behind Grupo Profuturo SAB and Nemak S A 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.