Correlation Between Grupo Aeroportuario and Kimberly Clark

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

Diversification Opportunities for Grupo Aeroportuario and Kimberly Clark

-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between Grupo and Kimberly is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aeroportuario del and Kimberly Clark de Mxico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimberly Clark de and Grupo Aeroportuario 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 Aeroportuario del are associated (or correlated) with Kimberly Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimberly Clark de has no effect on the direction of Grupo Aeroportuario i.e., Grupo Aeroportuario and Kimberly Clark go up and down completely randomly.

Pair Corralation between Grupo Aeroportuario and Kimberly Clark

Assuming the 90 days trading horizon Grupo Aeroportuario del is expected to generate 1.55 times more return on investment than Kimberly Clark. However, Grupo Aeroportuario is 1.55 times more volatile than Kimberly Clark de Mxico. It trades about 0.07 of its potential returns per unit of risk. Kimberly Clark de Mxico is currently generating about -0.03 per unit of risk. If you would invest  37,925  in Grupo Aeroportuario del on August 24, 2024 and sell it today you would earn a total of  16,186  from holding Grupo Aeroportuario del or generate 42.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Grupo Aeroportuario del  vs.  Kimberly Clark de Mxico

 Performance 
       Timeline  
Grupo Aeroportuario del 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aeroportuario del are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Grupo Aeroportuario is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
Kimberly Clark de 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kimberly Clark de Mxico 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 fundamental drivers remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Grupo Aeroportuario and Kimberly Clark Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grupo Aeroportuario and Kimberly Clark

The main advantage of trading using opposite Grupo Aeroportuario and Kimberly Clark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aeroportuario position performs unexpectedly, Kimberly Clark 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 Kimberly Clark will offset losses from the drop in Kimberly Clark's long position.
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The idea behind Grupo Aeroportuario del and Kimberly Clark de Mxico 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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Check out your portfolio center.
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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