Correlation Between SIMS METAL and REGAL ASIAN
Can any of the company-specific risk be diversified away by investing in both SIMS METAL and REGAL ASIAN 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 SIMS METAL and REGAL ASIAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMS METAL MGT and REGAL ASIAN INVESTMENTS, you can compare the effects of market volatilities on SIMS METAL and REGAL ASIAN 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 SIMS METAL with a short position of REGAL ASIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMS METAL and REGAL ASIAN.
Diversification Opportunities for SIMS METAL and REGAL ASIAN
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SIMS and REGAL is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding SIMS METAL MGT and REGAL ASIAN INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL ASIAN INVESTMENTS and SIMS METAL 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 SIMS METAL MGT are associated (or correlated) with REGAL ASIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL ASIAN INVESTMENTS has no effect on the direction of SIMS METAL i.e., SIMS METAL and REGAL ASIAN go up and down completely randomly.
Pair Corralation between SIMS METAL and REGAL ASIAN
Assuming the 90 days trading horizon SIMS METAL is expected to generate 1.77 times less return on investment than REGAL ASIAN. But when comparing it to its historical volatility, SIMS METAL MGT is 1.14 times less risky than REGAL ASIAN. It trades about 0.24 of its potential returns per unit of risk. REGAL ASIAN INVESTMENTS is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 117.00 in REGAL ASIAN INVESTMENTS on November 28, 2024 and sell it today you would earn a total of 14.00 from holding REGAL ASIAN INVESTMENTS or generate 11.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
SIMS METAL MGT vs. REGAL ASIAN INVESTMENTS
Performance |
| Timeline |
| SIMS METAL MGT |
| REGAL ASIAN INVESTMENTS |
SIMS METAL and REGAL ASIAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMS METAL and REGAL ASIAN
The main advantage of trading using opposite SIMS METAL and REGAL ASIAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMS METAL position performs unexpectedly, REGAL ASIAN 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 REGAL ASIAN will offset losses from the drop in REGAL ASIAN's long position.| SIMS METAL vs. Japan Post Insurance | SIMS METAL vs. Sabre Insurance Group | SIMS METAL vs. THAI BEVERAGE | SIMS METAL vs. Direct Line Insurance |
| REGAL ASIAN vs. Calibre Mining Corp | REGAL ASIAN vs. Perseus Mining Limited | REGAL ASIAN vs. China Foods Limited | REGAL ASIAN vs. CORNISH METALS INC |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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