Correlation Between Grupo Bafar and Alfa SAB

Can any of the company-specific risk be diversified away by investing in both Grupo Bafar 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 Bafar 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 Bafar SAB and Alfa SAB de, you can compare the effects of market volatilities on Grupo Bafar 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 Bafar with a short position of Alfa SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Bafar and Alfa SAB.

Diversification Opportunities for Grupo Bafar and Alfa SAB

0.78

Correlation Coefficient

Grupo Bafar  Alfa SAB

Poor diversification

The 3 months correlation between Grupo and Alfa is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Bafar 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 Bafar 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 Bafar 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 Bafar i.e., Grupo Bafar and Alfa SAB go up and down completely randomly.

Pair Corralation between Grupo Bafar and Alfa SAB

If you would invest  12,000  in Grupo Bafar SAB on February 3, 2024 and sell it today you would earn a total of  0.00  from holding Grupo Bafar SAB or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Grupo Bafar SAB  vs.  Alfa SAB de

Grupo Bafar SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Bafar SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Alfa SAB de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfa SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Grupo Bafar and Alfa SAB

The main advantage of trading using opposite Grupo Bafar and Alfa SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Bafar 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.

The idea behind Grupo Bafar 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.

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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.