Correlation Between Grupo Mxico and Alfa SAB

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

Diversification Opportunities for Grupo Mxico and Alfa SAB

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Grupo and Alfa is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Mxico SAB and Alfa SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa SAB de and Grupo Mxico 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 Mxico SAB are associated (or correlated) with Alfa SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa SAB de has no effect on the direction of Grupo Mxico i.e., Grupo Mxico and Alfa SAB go up and down completely randomly.

Pair Corralation between Grupo Mxico and Alfa SAB

Assuming the 90 days trading horizon Grupo Mxico is expected to generate 10.73 times less return on investment than Alfa SAB. But when comparing it to its historical volatility, Grupo Mxico SAB is 1.31 times less risky than Alfa SAB. It trades about 0.01 of its potential returns per unit of risk. Alfa SAB de is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,166  in Alfa SAB de on August 24, 2024 and sell it today you would earn a total of  295.00  from holding Alfa SAB de or generate 25.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Grupo Mxico SAB  vs.  Alfa SAB de

 Performance 
       Timeline  
Grupo Mxico SAB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grupo Mxico SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Grupo Mxico is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
Alfa SAB de 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Alfa SAB de are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Alfa SAB displayed solid returns over the last few months and may actually be approaching a breakup point.

Grupo Mxico and Alfa SAB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grupo Mxico and Alfa SAB

The main advantage of trading using opposite Grupo Mxico and Alfa SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Mxico position performs unexpectedly, Alfa 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 Alfa SAB will offset losses from the drop in Alfa SAB's long position.
Grupo Mxico vs. CEMEX SAB de
Grupo Mxico vs. Grupo Financiero Banorte
Grupo Mxico vs. Alfa SAB de
Grupo Mxico vs. Fomento Econmico Mexicano
The idea behind Grupo Mxico SAB and Alfa 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.
Alfa SAB vs. Grupo Mxico SAB
Alfa SAB vs. Grupo Financiero Banorte
Alfa SAB vs. Fomento Econmico Mexicano
Alfa SAB vs. CEMEX SAB de
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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