Correlation Between Gruma SAB and Promotora

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

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

Diversification Opportunities for Gruma SAB and Promotora

-0.27

Correlation Coefficient

Gruma SAB  Promotora

Very good diversification

The 3 months correlation between Gruma and Promotora is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Gruma SAB de and Promotora y Operadora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Promotora y Operadora and Gruma SAB 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 Gruma SAB de are associated (or correlated) with Promotora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Promotora y Operadora has no effect on the direction of Gruma SAB i.e., Gruma SAB and Promotora go up and down completely randomly.

Pair Corralation between Gruma SAB and Promotora

Assuming the 90 days trading horizon Gruma SAB de is expected to under-perform the Promotora. But the stock apears to be less risky and, when comparing its historical volatility, Gruma SAB de is 1.0 times less risky than Promotora. The stock trades about -0.04 of its potential returns per unit of risk. The Promotora y Operadora is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  17,653  in Promotora y Operadora on August 31, 2024 and sell it today you would earn a total of  1,156  from holding Promotora y Operadora or generate 6.55% return on investment over 90 days.

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

Gruma SAB de  vs.  Promotora y Operadora

Gruma SAB de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gruma SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Gruma SAB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Promotora y Operadora

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Promotora y Operadora are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Promotora may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Gruma SAB and Promotora

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

The idea behind Gruma SAB de and Promotora y Operadora 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.