Correlation Between Grupo Simec and Cebu Air
Can any of the company-specific risk be diversified away by investing in both Grupo Simec and Cebu Air 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 Simec and Cebu Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Simec SAB and Cebu Air ADR, you can compare the effects of market volatilities on Grupo Simec and Cebu Air 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 Simec with a short position of Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Simec and Cebu Air.
Diversification Opportunities for Grupo Simec and Cebu Air
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grupo and Cebu is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and Cebu Air ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air ADR and Grupo Simec 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 Simec SAB are associated (or correlated) with Cebu Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cebu Air ADR has no effect on the direction of Grupo Simec i.e., Grupo Simec and Cebu Air go up and down completely randomly.
Pair Corralation between Grupo Simec and Cebu Air
Considering the 90-day investment horizon Grupo Simec SAB is expected to generate 1.08 times more return on investment than Cebu Air. However, Grupo Simec is 1.08 times more volatile than Cebu Air ADR. It trades about 0.01 of its potential returns per unit of risk. Cebu Air ADR is currently generating about -0.02 per unit of risk. If you would invest 3,101 in Grupo Simec SAB on August 26, 2024 and sell it today you would lose (524.00) from holding Grupo Simec SAB or give up 16.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 88.53% |
| Values | Daily Returns |
Grupo Simec SAB vs. Cebu Air ADR
Performance |
| Timeline |
| Grupo Simec SAB |
| Cebu Air ADR |
Grupo Simec and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Simec and Cebu Air
The main advantage of trading using opposite Grupo Simec and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Simec position performs unexpectedly, Cebu Air 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 Cebu Air will offset losses from the drop in Cebu Air's long position.| Grupo Simec vs. Synalloy | Grupo Simec vs. Mesabi Trust | Grupo Simec vs. Algoma Steel Group | Grupo Simec vs. Olympic Steel |
| Cebu Air vs. Air China Limited | Cebu Air vs. Air France KLM SA | Cebu Air vs. AirAsia Group Berhad | Cebu Air vs. China Southern Airlines |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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