Correlation Between Grupo Rotoplas and Grupo Financiero

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

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

Diversification Opportunities for Grupo Rotoplas and Grupo Financiero

-0.16

Correlation Coefficient

Grupo Rotoplas  Grupo Financiero

Good diversification

The 3 months correlation between Grupo and Grupo is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Rotoplas SAB and Grupo Financiero Inbursa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Inbursa and Grupo Rotoplas 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 Rotoplas SAB are associated (or correlated) with Grupo Financiero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Financiero Inbursa has no effect on the direction of Grupo Rotoplas i.e., Grupo Rotoplas and Grupo Financiero go up and down completely randomly.

Pair Corralation between Grupo Rotoplas and Grupo Financiero

Assuming the 90 days trading horizon Grupo Rotoplas SAB is expected to under-perform the Grupo Financiero. In addition to that, Grupo Rotoplas is 1.18 times more volatile than Grupo Financiero Inbursa. It trades about -0.03 of its total potential returns per unit of risk. Grupo Financiero Inbursa is currently generating about 0.05 per unit of volatility. If you would invest  3,685  in Grupo Financiero Inbursa on September 12, 2024 and sell it today you would earn a total of  1,169  from holding Grupo Financiero Inbursa or generate 31.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

Grupo Rotoplas SAB  vs.  Grupo Financiero Inbursa

Grupo Rotoplas SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Rotoplas SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Grupo Financiero Inbursa

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Financiero Inbursa are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, Grupo Financiero may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Grupo Rotoplas and Grupo Financiero

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

The idea behind Grupo Rotoplas SAB and Grupo Financiero Inbursa 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 Global Correlations module to find global opportunities by holding instruments from different markets.