Correlation Between Grupo Bimbo and WH Group

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

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

Diversification Opportunities for Grupo Bimbo and WH Group

-0.59

Correlation Coefficient

Grupo Bimbo  WH Group

Excellent diversification

The 3 months correlation between Grupo and WHGLY is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Bimbo SAB and WH Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WH Group and Grupo Bimbo 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 Bimbo SAB are associated (or correlated) with WH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WH Group has no effect on the direction of Grupo Bimbo i.e., Grupo Bimbo and WH Group go up and down completely randomly.

Pair Corralation between Grupo Bimbo and WH Group

Assuming the 90 days horizon Grupo Bimbo SAB is expected to generate 2.52 times more return on investment than WH Group. However, Grupo Bimbo is 2.52 times more volatile than WH Group Ltd. It trades about 0.04 of its potential returns per unit of risk. WH Group Ltd is currently generating about 0.02 per unit of risk. If you would invest  297.00  in Grupo Bimbo SAB on February 6, 2024 and sell it today you would earn a total of  108.00  from holding Grupo Bimbo SAB or generate 36.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	86.26%
Values	Daily Returns

Grupo Bimbo SAB  vs.  WH Group Ltd

Grupo Bimbo SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Bimbo SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

WH Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WH Group Ltd are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, WH Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Bimbo and WH Group

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

The idea behind Grupo Bimbo SAB and WH Group Ltd 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.