Correlation Between SIMS METAL and Comstock Holding
Can any of the company-specific risk be diversified away by investing in both SIMS METAL and Comstock Holding 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 Comstock Holding 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 Comstock Holding Companies, you can compare the effects of market volatilities on SIMS METAL and Comstock Holding 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 Comstock Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMS METAL and Comstock Holding.
Diversification Opportunities for SIMS METAL and Comstock Holding
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SIMS and Comstock is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding SIMS METAL MGT and Comstock Holding Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comstock Holding Com 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 Comstock Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comstock Holding Com has no effect on the direction of SIMS METAL i.e., SIMS METAL and Comstock Holding go up and down completely randomly.
Pair Corralation between SIMS METAL and Comstock Holding
Assuming the 90 days trading horizon SIMS METAL MGT is expected to generate 0.39 times more return on investment than Comstock Holding. However, SIMS METAL MGT is 2.54 times less risky than Comstock Holding. It trades about -0.42 of its potential returns per unit of risk. Comstock Holding Companies is currently generating about -0.17 per unit of risk. If you would invest 810.00 in SIMS METAL MGT on September 27, 2024 and sell it today you would lose (105.00) from holding SIMS METAL MGT or give up 12.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMS METAL MGT vs. Comstock Holding Companies
Performance |
| Timeline |
| SIMS METAL MGT |
| Comstock Holding Com |
SIMS METAL and Comstock Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMS METAL and Comstock Holding
The main advantage of trading using opposite SIMS METAL and Comstock Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMS METAL position performs unexpectedly, Comstock Holding 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 Comstock Holding will offset losses from the drop in Comstock Holding's long position.The idea behind SIMS METAL MGT and Comstock Holding Companies 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.| Comstock Holding vs. SIMS METAL MGT | Comstock Holding vs. United Utilities Group | Comstock Holding vs. Evolution Mining Limited | Comstock Holding vs. Aluminum of |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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