Correlation Between Cheetah Mobile and Industrias Bachoco

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

Diversification Opportunities for Cheetah Mobile and Industrias Bachoco

-0.57
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Cheetah and Industrias is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cheetah Mobile and Industrias Bachoco SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrias Bachoco SAB and Cheetah Mobile 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 Cheetah Mobile 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 SAB has no effect on the direction of Cheetah Mobile i.e., Cheetah Mobile and Industrias Bachoco go up and down completely randomly.

Pair Corralation between Cheetah Mobile and Industrias Bachoco

Given the investment horizon of 90 days Cheetah Mobile is expected to under-perform the Industrias Bachoco. In addition to that, Cheetah Mobile is 3.35 times more volatile than Industrias Bachoco SAB. It trades about -0.04 of its total potential returns per unit of risk. Industrias Bachoco SAB is currently generating about 0.07 per unit of volatility. If you would invest  4,836  in Industrias Bachoco SAB on September 8, 2022 and sell it today you would earn a total of  158.00  from holding Industrias Bachoco SAB or generate 3.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Cheetah Mobile  vs.  Industrias Bachoco SAB

 Performance (%) 
       Timeline  
Cheetah Mobile 
Cheetah Performance
0 of 100
Over the last 90 days Cheetah Mobile has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental indicators remain relatively steady which may send shares a bit higher in January 2023. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Cheetah Price Channel

Industrias Bachoco SAB 
Industrias Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Industrias Bachoco SAB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Industrias Bachoco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Industrias Price Channel

Cheetah Mobile and Industrias Bachoco Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cheetah Mobile and Industrias Bachoco

The main advantage of trading using opposite Cheetah Mobile and Industrias Bachoco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheetah Mobile 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 Cheetah Mobile and Industrias Bachoco SAB 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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