Correlation Between Bgc Partners and Industrias Bachoco

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

Diversification Opportunities for Bgc Partners and Industrias Bachoco

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between Bgc Partners and Industrias is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bgc Partners Cl and Industrias Bachoco SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrias Bachoco and Bgc Partners 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 Bgc Partners Cl are associated (or correlated) with Industrias Bachoco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrias Bachoco has no effect on the direction of Bgc Partners i.e., Bgc Partners and Industrias Bachoco go up and down completely randomly.

Pair Corralation between Bgc Partners and Industrias Bachoco

Given the investment horizon of 90 days Bgc Partners is expected to generate 1.76 times less return on investment than Industrias Bachoco. In addition to that, Bgc Partners is 1.53 times more volatile than Industrias Bachoco SA. It trades about 0.01 of its total potential returns per unit of risk. Industrias Bachoco SA is currently generating about 0.03 per unit of volatility. If you would invest  4,257  in Industrias Bachoco SA on August 31, 2022 and sell it today you would earn a total of  1,014  from holding Industrias Bachoco SA or generate 23.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Bgc Partners Cl  vs.  Industrias Bachoco SA

 Performance (%) 
       Timeline  
Bgc Partners Cl 
Bgc Partners Performance
0 of 100
Over the last 90 days Bgc Partners Cl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Bgc Partners is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the insiders.

Bgc Partners Price Channel

Industrias Bachoco 
Industrias Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Industrias Bachoco SA are ranked lower than 11 (%) 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

Bgc Partners and Industrias Bachoco Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bgc Partners and Industrias Bachoco

The main advantage of trading using opposite Bgc Partners and Industrias Bachoco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bgc Partners position performs unexpectedly, Industrias Bachoco 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 Industrias Bachoco will offset losses from the drop in Industrias Bachoco's long position.
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The idea behind Bgc Partners Cl and Industrias Bachoco SA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

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