Correlation Between Industrias Bachoco and Cantalope

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Can any of the company-specific risk be diversified away by investing in both Industrias Bachoco and Cantalope 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 Cantalope 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 Cantalope, you can compare the effects of market volatilities on Industrias Bachoco and Cantalope 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 Cantalope. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrias Bachoco and Cantalope.

Diversification Opportunities for Industrias Bachoco and Cantalope

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between Industrias and Cantalope is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Industrias Bachoco SA and Cantalope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantalope 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 Cantalope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantalope has no effect on the direction of Industrias Bachoco i.e., Industrias Bachoco and Cantalope go up and down completely randomly.

Pair Corralation between Industrias Bachoco and Cantalope

Considering the 90-day investment horizon Industrias Bachoco SA is expected to generate 0.51 times more return on investment than Cantalope. However, Industrias Bachoco SA is 1.94 times less risky than Cantalope. It trades about 0.03 of its potential returns per unit of risk. Cantalope is currently generating about -0.05 per unit of risk. If you would invest  4,247  in Industrias Bachoco SA on August 28, 2022 and sell it today you would earn a total of  903.00  from holding Industrias Bachoco SA or generate 21.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Industrias Bachoco SA  vs.  Cantalope

 Performance (%) 
       Timeline  
Industrias Bachoco 
Industrias Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Industrias Bachoco SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Industrias Bachoco may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Industrias Price Channel

Cantalope 
Cantalope Performance
0 of 100
Over the last 90 days Cantalope has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in December 2022. The recent disarray may also be a sign of long period up-swing for the firm insiders.

Cantalope Price Channel

Industrias Bachoco and Cantalope Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Industrias Bachoco and Cantalope

The main advantage of trading using opposite Industrias Bachoco and Cantalope positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrias Bachoco position performs unexpectedly, Cantalope 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 Cantalope will offset losses from the drop in Cantalope's long position.
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The idea behind Industrias Bachoco SA and Cantalope 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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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