Correlation Between Value Grupo and Kimberly Clark

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

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

Diversification Opportunities for Value Grupo and Kimberly Clark

0.23

Correlation Coefficient

Value Grupo  Kimberly Clark

Modest diversification

The 3 months correlation between Value and Kimberly is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Value Grupo Financiero and Kimberly Clark de Mxico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimberly Clark de and Value Grupo 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 Value Grupo Financiero are associated (or correlated) with Kimberly Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimberly Clark de has no effect on the direction of Value Grupo i.e., Value Grupo and Kimberly Clark go up and down completely randomly.

Pair Corralation between Value Grupo and Kimberly Clark

Assuming the 90 days trading horizon Value Grupo Financiero is expected to generate 1.86 times more return on investment than Kimberly Clark. However, Value Grupo is 1.86 times more volatile than Kimberly Clark de Mxico. It trades about 0.02 of its potential returns per unit of risk. Kimberly Clark de Mxico is currently generating about -0.06 per unit of risk. If you would invest  9,000  in Value Grupo Financiero on September 28, 2024 and sell it today you would earn a total of  304.00  from holding Value Grupo Financiero or generate 3.38% return on investment over 90 days.

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

Value Grupo Financiero  vs.  Kimberly Clark de Mxico

Value Grupo Financiero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Value Grupo Financiero has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Value Grupo is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Kimberly Clark de

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Value Grupo and Kimberly Clark

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

The idea behind Value Grupo Financiero and Kimberly Clark de Mxico 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.