Correlation Between Grupo Cementos and International Business

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

By analyzing existing cross correlation between Grupo Cementos de and International Business Machines, you can compare the effects of market volatilities on Grupo Cementos and International Business 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 Cementos with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Cementos and International Business.

Diversification Opportunities for Grupo Cementos and International Business

-0.13

Correlation Coefficient

Grupo Cementos  International Business

Good diversification

The 3 months correlation between Grupo and International is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Cementos de and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Grupo Cementos 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 Cementos de are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Grupo Cementos i.e., Grupo Cementos and International Business go up and down completely randomly.

Pair Corralation between Grupo Cementos and International Business

Assuming the 90 days horizon Grupo Cementos de is expected to generate 1.58 times more return on investment than International Business. However, Grupo Cementos is 1.58 times more volatile than International Business Machines. It trades about 0.22 of its potential returns per unit of risk. International Business Machines is currently generating about -0.15 per unit of risk. If you would invest  1,128  in Grupo Cementos de on January 25, 2024 and sell it today you would earn a total of  72.00  from holding Grupo Cementos de or generate 6.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Grupo Cementos de  vs.  International Business Machine

Grupo Cementos de

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Cementos de are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Grupo Cementos may actually be approaching a critical reversion point that can send shares even higher in May 2024.

International Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Business Machines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, International Business is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Grupo Cementos and International Business

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

The idea behind Grupo Cementos de and International Business Machines 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.