Correlation Between Industrias and Grupo Elektra

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

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

Diversification Opportunities for Industrias and Grupo Elektra

0.31

Correlation Coefficient

Industrias  Grupo Elektra

Weak diversification

The 3 months correlation between Industrias and Grupo is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Industrias CH S and Grupo Elektra SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Elektra SAB and Industrias 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 Industrias CH S are associated (or correlated) with Grupo Elektra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Elektra SAB has no effect on the direction of Industrias i.e., Industrias and Grupo Elektra go up and down completely randomly.

Pair Corralation between Industrias and Grupo Elektra

Assuming the 90 days trading horizon Industrias CH S is expected to generate 0.11 times more return on investment than Grupo Elektra. However, Industrias CH S is 8.91 times less risky than Grupo Elektra. It trades about -0.05 of its potential returns per unit of risk. Grupo Elektra SAB is currently generating about -0.06 per unit of risk. If you would invest  18,750  in Industrias CH S on September 29, 2024 and sell it today you would lose (750.00) from holding Industrias CH S or give up 4.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Industrias CH S  vs.  Grupo Elektra SAB

Industrias CH S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industrias CH S has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Industrias is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Grupo Elektra SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Elektra SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Industrias and Grupo Elektra

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

The idea behind Industrias CH S and Grupo Elektra 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 Transaction History module to view history of all your transactions and understand their impact on performance.