Correlation Between Grupo Rotoplas and Grupo Comercial

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Can any of the company-specific risk be diversified away by investing in both Grupo Rotoplas and Grupo Comercial 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 Rotoplas and Grupo Comercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Rotoplas SAB and Grupo Comercial Chedraui, you can compare the effects of market volatilities on Grupo Rotoplas and Grupo Comercial 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 Rotoplas with a short position of Grupo Comercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Rotoplas and Grupo Comercial.

Diversification Opportunities for Grupo Rotoplas and Grupo Comercial

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Grupo and Grupo is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Rotoplas SAB and Grupo Comercial Chedraui in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Comercial Chedraui and Grupo Rotoplas 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 Rotoplas SAB are associated (or correlated) with Grupo Comercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Comercial Chedraui has no effect on the direction of Grupo Rotoplas i.e., Grupo Rotoplas and Grupo Comercial go up and down completely randomly.

Pair Corralation between Grupo Rotoplas and Grupo Comercial

Assuming the 90 days trading horizon Grupo Rotoplas SAB is expected to under-perform the Grupo Comercial. In addition to that, Grupo Rotoplas is 1.48 times more volatile than Grupo Comercial Chedraui. It trades about -0.03 of its total potential returns per unit of risk. Grupo Comercial Chedraui is currently generating about 0.07 per unit of volatility. If you would invest  8,181  in Grupo Comercial Chedraui on September 2, 2024 and sell it today you would earn a total of  5,084  from holding Grupo Comercial Chedraui or generate 62.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Grupo Rotoplas SAB  vs.  Grupo Comercial Chedraui

 Performance 
       Timeline  
Grupo Rotoplas SAB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grupo Rotoplas SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Grupo Comercial Chedraui 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grupo Comercial Chedraui has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Grupo Rotoplas and Grupo Comercial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grupo Rotoplas and Grupo Comercial

The main advantage of trading using opposite Grupo Rotoplas and Grupo Comercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Rotoplas position performs unexpectedly, Grupo Comercial 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 Comercial will offset losses from the drop in Grupo Comercial's long position.
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The idea behind Grupo Rotoplas SAB and Grupo Comercial Chedraui 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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