Correlation Between Grupo Carso and Grupo Financiero

Can any of the company-specific risk be diversified away by investing in both Grupo Carso and Grupo Financiero 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 Grupo Financiero 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 Grupo Financiero Inbursa, you can compare the effects of market volatilities on Grupo Carso and Grupo Financiero 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 Grupo Financiero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Carso and Grupo Financiero.

Diversification Opportunities for Grupo Carso and Grupo Financiero

0.37

Correlation Coefficient

Grupo Carso  Grupo Financiero

Weak diversification

The 3 months correlation between Grupo and Grupo is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and Grupo Financiero Inbursa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Inbursa 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 Grupo Financiero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Financiero Inbursa has no effect on the direction of Grupo Carso i.e., Grupo Carso and Grupo Financiero go up and down completely randomly.

Pair Corralation between Grupo Carso and Grupo Financiero

Assuming the 90 days trading horizon Grupo Carso SAB is expected to under-perform the Grupo Financiero. In addition to that, Grupo Carso is 1.35 times more volatile than Grupo Financiero Inbursa. It trades about -0.14 of its total potential returns per unit of risk. Grupo Financiero Inbursa is currently generating about -0.17 per unit of volatility. If you would invest  5,107  in Grupo Financiero Inbursa on February 2, 2024 and sell it today you would lose (360.00) from holding Grupo Financiero Inbursa or give up 7.05% of portfolio value over 90 days.

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

Grupo Carso SAB  vs.  Grupo Financiero Inbursa

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 June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Grupo Financiero Inbursa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Financiero Inbursa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Grupo Financiero is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Grupo Carso and Grupo Financiero

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

The idea behind Grupo Carso SAB and Grupo Financiero Inbursa 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.