Correlation Between GM and Alsea SAB
Can any of the company-specific risk be diversified away by investing in both GM and Alsea SAB 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 GM and Alsea SAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Alsea SAB de, you can compare the effects of market volatilities on GM and Alsea SAB 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 GM with a short position of Alsea SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Alsea SAB.
Diversification Opportunities for GM and Alsea SAB
Very weak diversification
The 3 months correlation between GM and Alsea is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Alsea SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alsea SAB de and GM 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 General Motors are associated (or correlated) with Alsea SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alsea SAB de has no effect on the direction of GM i.e., GM and Alsea SAB go up and down completely randomly.
Pair Corralation between GM and Alsea SAB
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Alsea SAB. In addition to that, GM is 1.13 times more volatile than Alsea SAB de. It trades about -0.13 of its total potential returns per unit of risk. Alsea SAB de is currently generating about -0.04 per unit of volatility. If you would invest 4,548 in Alsea SAB de on November 5, 2024 and sell it today you would lose (133.00) from holding Alsea SAB de or give up 2.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Motors vs. Alsea SAB de
Performance |
| Timeline |
| General Motors |
| Alsea SAB de |
GM and Alsea SAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Alsea SAB
The main advantage of trading using opposite GM and Alsea SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Alsea SAB 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 Alsea SAB will offset losses from the drop in Alsea SAB's long position.The idea behind General Motors and Alsea SAB de 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.| Alsea SAB vs. CEMEX SAB de | Alsea SAB vs. Grupo Financiero Banorte | Alsea SAB vs. Grupo Bimbo SAB | Alsea SAB vs. Fomento Econmico Mexicano |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |