Correlation Between Grupo Carso and Kossan Rubber

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

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

Diversification Opportunities for Grupo Carso and Kossan Rubber

-0.75

Correlation Coefficient

Grupo Carso  Kossan Rubber

Pay attention - limited upside

The 3 months correlation between Grupo and Kossan is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and Kossan Rubber Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kossan Rubber Industries and Grupo Carso 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 Carso SAB are associated (or correlated) with Kossan Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kossan Rubber Industries has no effect on the direction of Grupo Carso i.e., Grupo Carso and Kossan Rubber go up and down completely randomly.

Pair Corralation between Grupo Carso and Kossan Rubber

Assuming the 90 days horizon Grupo Carso SAB is expected to under-perform the Kossan Rubber. In addition to that, Grupo Carso is 1.92 times more volatile than Kossan Rubber Industries. It trades about -0.11 of its total potential returns per unit of risk. Kossan Rubber Industries is currently generating about 0.13 per unit of volatility. If you would invest  25.00  in Kossan Rubber Industries on January 24, 2024 and sell it today you would earn a total of  2.00  from holding Kossan Rubber Industries or generate 8.0% return on investment over 90 days.

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

Grupo Carso SAB  vs.  Kossan Rubber Industries

Grupo Carso SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Carso SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kossan Rubber Industries

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Grupo Carso and Kossan Rubber

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

The idea behind Grupo Carso SAB and Kossan Rubber Industries 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.