Correlation Between Grupo Financiero and Ternium SA
Can any of the company-specific risk be diversified away by investing in both Grupo Financiero and Ternium SA 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 Ternium SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Financiero Galicia and Ternium SA DRC, you can compare the effects of market volatilities on Grupo Financiero and Ternium SA 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 Ternium SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Financiero and Ternium SA.
Diversification Opportunities for Grupo Financiero and Ternium SA
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Grupo and Ternium is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Galicia and Ternium SA DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ternium SA DRC 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 Galicia are associated (or correlated) with Ternium SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ternium SA DRC has no effect on the direction of Grupo Financiero i.e., Grupo Financiero and Ternium SA go up and down completely randomly.
Pair Corralation between Grupo Financiero and Ternium SA
Assuming the 90 days trading horizon Grupo Financiero Galicia is expected to generate 0.87 times more return on investment than Ternium SA. However, Grupo Financiero Galicia is 1.15 times less risky than Ternium SA. It trades about -0.02 of its potential returns per unit of risk. Ternium SA DRC is currently generating about -0.22 per unit of risk. If you would invest 625,000 in Grupo Financiero Galicia on August 27, 2024 and sell it today you would lose (5,000) from holding Grupo Financiero Galicia or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Financiero Galicia vs. Ternium SA DRC
Performance |
| Timeline |
| Grupo Financiero Galicia |
| Ternium SA DRC |
Grupo Financiero and Ternium SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Financiero and Ternium SA
The main advantage of trading using opposite Grupo Financiero and Ternium SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Financiero position performs unexpectedly, Ternium SA 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 Ternium SA will offset losses from the drop in Ternium SA's long position.| Grupo Financiero vs. United States Steel | Grupo Financiero vs. Transportadora de Gas | Grupo Financiero vs. Harmony Gold Mining | Grupo Financiero vs. Agrometal SAI |
| Ternium SA vs. United States Steel | Ternium SA vs. Pfizer Inc | Ternium SA vs. Distribuidora de Gas | Ternium SA vs. IRSA Propiedades Comerciales |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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