Correlation Between Grupo Mxico and Sumitomo Metal
Can any of the company-specific risk be diversified away by investing in both Grupo Mxico and Sumitomo Metal 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 Grupo Mxico and Sumitomo Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Mxico SAB and Sumitomo Metal Mining, you can compare the effects of market volatilities on Grupo Mxico and Sumitomo Metal 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 Grupo Mxico with a short position of Sumitomo Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Mxico and Sumitomo Metal.
Diversification Opportunities for Grupo Mxico and Sumitomo Metal
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grupo and Sumitomo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Mxico SAB and Sumitomo Metal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Metal Mining and Grupo Mxico 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 Grupo Mxico SAB are associated (or correlated) with Sumitomo Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Metal Mining has no effect on the direction of Grupo Mxico i.e., Grupo Mxico and Sumitomo Metal go up and down completely randomly.
Pair Corralation between Grupo Mxico and Sumitomo Metal
Assuming the 90 days horizon Grupo Mxico SAB is expected to generate 1.03 times more return on investment than Sumitomo Metal. However, Grupo Mxico is 1.03 times more volatile than Sumitomo Metal Mining. It trades about -0.06 of its potential returns per unit of risk. Sumitomo Metal Mining is currently generating about -0.08 per unit of risk. If you would invest 631.00 in Grupo Mxico SAB on August 26, 2024 and sell it today you would lose (128.00) from holding Grupo Mxico SAB or give up 20.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Mxico SAB vs. Sumitomo Metal Mining
Performance |
| Timeline |
| Grupo Mxico SAB |
| Sumitomo Metal Mining |
Grupo Mxico and Sumitomo Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Mxico and Sumitomo Metal
The main advantage of trading using opposite Grupo Mxico and Sumitomo Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Mxico position performs unexpectedly, Sumitomo Metal 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 Sumitomo Metal will offset losses from the drop in Sumitomo Metal's long position.| Grupo Mxico vs. Pilbara Minerals Limited | Grupo Mxico vs. South32 Limited | Grupo Mxico vs. Critical Elements | Grupo Mxico vs. TVI Pacific |
| Sumitomo Metal vs. Boliden AB ADR | Sumitomo Metal vs. Anglo American PLC | Sumitomo Metal vs. Glencore PLC | Sumitomo Metal vs. Snow Lake Resources |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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