Correlation Between New Oriental and Grupo Simec
Can any of the company-specific risk be diversified away by investing in both New Oriental and Grupo Simec 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 New Oriental and Grupo Simec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Oriental Education and Grupo Simec SAB, you can compare the effects of market volatilities on New Oriental and Grupo Simec 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 New Oriental with a short position of Grupo Simec. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Grupo Simec.
Diversification Opportunities for New Oriental and Grupo Simec
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between New and Grupo is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and Grupo Simec SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Simec SAB and New Oriental 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 New Oriental Education are associated (or correlated) with Grupo Simec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Simec SAB has no effect on the direction of New Oriental i.e., New Oriental and Grupo Simec go up and down completely randomly.
Pair Corralation between New Oriental and Grupo Simec
Assuming the 90 days trading horizon New Oriental Education is expected to generate 4.0 times more return on investment than Grupo Simec. However, New Oriental is 4.0 times more volatile than Grupo Simec SAB. It trades about 0.01 of its potential returns per unit of risk. Grupo Simec SAB is currently generating about 0.02 per unit of risk. If you would invest 131,815 in New Oriental Education on September 14, 2024 and sell it today you would lose (5,215) from holding New Oriental Education or give up 3.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Oriental Education vs. Grupo Simec SAB
Performance |
| Timeline |
| New Oriental Education |
| Grupo Simec SAB |
New Oriental and Grupo Simec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and Grupo Simec
The main advantage of trading using opposite New Oriental and Grupo Simec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental position performs unexpectedly, Grupo Simec 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 Simec will offset losses from the drop in Grupo Simec's long position.| New Oriental vs. Cognizant Technology Solutions | New Oriental vs. United States Steel | New Oriental vs. Delta Air Lines | New Oriental vs. Grupo Sports World |
| Grupo Simec vs. CEMEX SAB de | Grupo Simec vs. Grupo Financiero Banorte | Grupo Simec vs. Alfa SAB de | Grupo Simec vs. Fomento Econmico Mexicano |
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 the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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