Correlation Between Grupo Financiero and Grupo Carso

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

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

Diversification Opportunities for Grupo Financiero and Grupo Carso

0.2

Correlation Coefficient

Grupo Financiero  Grupo Carso

Modest diversification

The 3 months correlation between Grupo and Grupo is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Inbursa and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB and Grupo Financiero 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 Financiero Inbursa are associated (or correlated) with Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of Grupo Financiero i.e., Grupo Financiero and Grupo Carso go up and down completely randomly.

Pair Corralation between Grupo Financiero and Grupo Carso

Assuming the 90 days trading horizon Grupo Financiero is expected to generate 1.89 times less return on investment than Grupo Carso. But when comparing it to its historical volatility, Grupo Financiero Inbursa is 1.08 times less risky than Grupo Carso. It trades about 0.05 of its potential returns per unit of risk. Grupo Carso SAB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,515  in Grupo Carso SAB on January 30, 2024 and sell it today you would earn a total of  7,326  from holding Grupo Carso SAB or generate 112.45% return on investment over 90 days.

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

Grupo Financiero Inbursa  vs.  Grupo Carso SAB

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 newest stock price agitation, may contribute to short-term losses for the retail investors.

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.

Pair Trading with Grupo Financiero and Grupo Carso

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

The idea behind Grupo Financiero Inbursa and Grupo Carso 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.