Correlation Between Grupo Carso and Bristol Myers

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

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

Diversification Opportunities for Grupo Carso and Bristol Myers

-0.49

Correlation Coefficient

Grupo Carso  Bristol Myers

Very good diversification

The 3 months correlation between Grupo and Bristol is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and Bristol Myers Squibb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristol Myers Squibb and Grupo Carso 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 Carso SAB are associated (or correlated) with Bristol Myers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristol Myers Squibb has no effect on the direction of Grupo Carso i.e., Grupo Carso and Bristol Myers go up and down completely randomly.

Pair Corralation between Grupo Carso and Bristol Myers

Assuming the 90 days trading horizon Grupo Carso SAB is expected to generate 1.95 times more return on investment than Bristol Myers. However, Grupo Carso is 1.95 times more volatile than Bristol Myers Squibb. It trades about -0.09 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about -0.22 per unit of risk. If you would invest  14,365  in Grupo Carso SAB on January 17, 2024 and sell it today you would lose (658.00) from holding Grupo Carso SAB or give up 4.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Grupo Carso SAB  vs.  Bristol Myers Squibb

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Bristol Myers Squibb

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Grupo Carso and Bristol Myers

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

The idea behind Grupo Carso SAB and Bristol Myers Squibb 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.