Correlation Between Bioventus and Industrias Bachoco

Can any of the company-specific risk be diversified away by investing in both Bioventus and Industrias Bachoco 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 Bioventus and Industrias Bachoco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bioventus and Industrias Bachoco SAB, you can compare the effects of market volatilities on Bioventus and Industrias Bachoco 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 Bioventus with a short position of Industrias Bachoco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bioventus and Industrias Bachoco.

Diversification Opportunities for Bioventus and Industrias Bachoco

0.57

Correlation Coefficient

Bioventus  Industrias Bachoco

Very weak diversification

The 3 months correlation between Bioventus and Industrias is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bioventus and Industrias Bachoco SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrias Bachoco SAB and Bioventus 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 Bioventus are associated (or correlated) with Industrias Bachoco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrias Bachoco SAB has no effect on the direction of Bioventus i.e., Bioventus and Industrias Bachoco go up and down completely randomly.

Pair Corralation between Bioventus and Industrias Bachoco

If you would invest  5,300  in Industrias Bachoco SAB on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Industrias Bachoco SAB or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Bioventus  vs.  Industrias Bachoco SAB

Bioventus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bioventus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bioventus is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Industrias Bachoco SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industrias Bachoco SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Industrias Bachoco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bioventus and Industrias Bachoco

The main advantage of trading using opposite Bioventus and Industrias Bachoco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bioventus position performs unexpectedly, Industrias Bachoco 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 Industrias Bachoco will offset losses from the drop in Industrias Bachoco's long position.

The idea behind Bioventus and Industrias Bachoco 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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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.