Correlation Between Grupo Cementos and International Business

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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

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Grupo and International is 0.94. 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 2.5 times more return on investment than International Business. However, Grupo Cementos is 2.5 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 0.44 per unit of risk. If you would invest  630.00  in Grupo Cementos De on September 5, 2022 and sell it today you would earn a total of  70.00  from holding Grupo Cementos De or generate 11.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.45%
ValuesDaily Returns

Grupo Cementos De  vs.  International Business Machine

 Performance (%) 
       Timeline  
Grupo Cementos De 
Grupo Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Cementos De are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Grupo Cementos may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Grupo Price Channel

International Business 
International Performance
14 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental drivers, International Business revealed solid returns over the last few months and may actually be approaching a breakup point.

International Price Channel

Grupo Cementos and International Business Volatility Contrast

   Predicted Return Density   
       Returns  

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.
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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.
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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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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