Correlation Between SIMS METAL and SERI INDUSTRIAL
Can any of the company-specific risk be diversified away by investing in both SIMS METAL and SERI INDUSTRIAL 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 SERI INDUSTRIAL 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 SERI INDUSTRIAL EO, you can compare the effects of market volatilities on SIMS METAL and SERI INDUSTRIAL 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 SERI INDUSTRIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMS METAL and SERI INDUSTRIAL.
Diversification Opportunities for SIMS METAL and SERI INDUSTRIAL
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SIMS and SERI is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding SIMS METAL MGT and SERI INDUSTRIAL EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SERI INDUSTRIAL EO 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 SERI INDUSTRIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SERI INDUSTRIAL EO has no effect on the direction of SIMS METAL i.e., SIMS METAL and SERI INDUSTRIAL go up and down completely randomly.
Pair Corralation between SIMS METAL and SERI INDUSTRIAL
Assuming the 90 days trading horizon SIMS METAL MGT is expected to generate 0.61 times more return on investment than SERI INDUSTRIAL. However, SIMS METAL MGT is 1.64 times less risky than SERI INDUSTRIAL. It trades about 0.09 of its potential returns per unit of risk. SERI INDUSTRIAL EO is currently generating about -0.06 per unit of risk. If you would invest 646.00 in SIMS METAL MGT on September 2, 2024 and sell it today you would earn a total of 164.00 from holding SIMS METAL MGT or generate 25.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMS METAL MGT vs. SERI INDUSTRIAL EO
Performance |
| Timeline |
| SIMS METAL MGT |
| SERI INDUSTRIAL EO |
SIMS METAL and SERI INDUSTRIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMS METAL and SERI INDUSTRIAL
The main advantage of trading using opposite SIMS METAL and SERI INDUSTRIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMS METAL position performs unexpectedly, SERI INDUSTRIAL 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 SERI INDUSTRIAL will offset losses from the drop in SERI INDUSTRIAL's long position.| SIMS METAL vs. GFL ENVIRONM | SIMS METAL vs. Charter Communications | SIMS METAL vs. NIPPON STEEL SPADR | SIMS METAL vs. Entravision Communications |
| SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple Inc | SERI INDUSTRIAL vs. Apple 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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