Correlation Between Industrias Bachoco and Halliburton

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Can any of the company-specific risk be diversified away by investing in both Industrias Bachoco and Halliburton 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 Industrias Bachoco and Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrias Bachoco SA and Halliburton, you can compare the effects of market volatilities on Industrias Bachoco and Halliburton 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 Industrias Bachoco with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrias Bachoco and Halliburton.

Diversification Opportunities for Industrias Bachoco and Halliburton

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Industrias and Halliburton is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Industrias Bachoco SA and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Industrias Bachoco 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 Industrias Bachoco SA are associated (or correlated) with Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Industrias Bachoco i.e., Industrias Bachoco and Halliburton go up and down completely randomly.

Pair Corralation between Industrias Bachoco and Halliburton

Considering the 90-day investment horizon Industrias Bachoco is expected to generate 2.85 times less return on investment than Halliburton. But when comparing it to its historical volatility, Industrias Bachoco SA is 2.43 times less risky than Halliburton. It trades about 0.26 of its potential returns per unit of risk. Halliburton is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  2,464  in Halliburton on August 30, 2022 and sell it today you would earn a total of  1,124  from holding Halliburton or generate 45.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Industrias Bachoco SA  vs.  Halliburton

 Performance (%) 
       Timeline  
Industrias Bachoco 
Industrias Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Industrias Bachoco SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish fundamental drivers, Industrias Bachoco may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Industrias Price Channel

Halliburton 
Halliburton Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Halliburton are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Halliburton revealed solid returns over the last few months and may actually be approaching a breakup point.

Halliburton Price Channel

Industrias Bachoco and Halliburton Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Industrias Bachoco and Halliburton

The main advantage of trading using opposite Industrias Bachoco and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrias Bachoco position performs unexpectedly, Halliburton 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 Halliburton will offset losses from the drop in Halliburton's long position.
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The idea behind Industrias Bachoco SA and Halliburton 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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