Correlation Between CEMEX SAB and Grupo Bimbo

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

Diversification Opportunities for CEMEX SAB and Grupo Bimbo

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between CEMEX and Grupo is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding CEMEX SAB de and Grupo Bimbo SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Bimbo SAB and CEMEX SAB 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 CEMEX SAB de are associated (or correlated) with Grupo Bimbo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Bimbo SAB has no effect on the direction of CEMEX SAB i.e., CEMEX SAB and Grupo Bimbo go up and down completely randomly.

Pair Corralation between CEMEX SAB and Grupo Bimbo

Assuming the 90 days trading horizon CEMEX SAB de is expected to generate 1.49 times more return on investment than Grupo Bimbo. However, CEMEX SAB is 1.49 times more volatile than Grupo Bimbo SAB. It trades about 0.05 of its potential returns per unit of risk. Grupo Bimbo SAB is currently generating about -0.19 per unit of risk. If you would invest  1,098  in CEMEX SAB de on August 28, 2024 and sell it today you would earn a total of  24.00  from holding CEMEX SAB de or generate 2.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

CEMEX SAB de  vs.  Grupo Bimbo SAB

 Performance 
       Timeline  
CEMEX SAB de 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CEMEX SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, CEMEX SAB is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.
Grupo Bimbo SAB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 unfluctuating performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

CEMEX SAB and Grupo Bimbo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CEMEX SAB and Grupo Bimbo

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