Correlation Between Grupo Simec and Century Aluminum
Can any of the company-specific risk be diversified away by investing in both Grupo Simec and Century Aluminum 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 Century Aluminum 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 Century Aluminum, you can compare the effects of market volatilities on Grupo Simec and Century Aluminum 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 Century Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Simec and Century Aluminum.
Diversification Opportunities for Grupo Simec and Century Aluminum
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Grupo and Century is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum 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 Century Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Aluminum has no effect on the direction of Grupo Simec i.e., Grupo Simec and Century Aluminum go up and down completely randomly.
Pair Corralation between Grupo Simec and Century Aluminum
Considering the 90-day investment horizon Grupo Simec SAB is expected to under-perform the Century Aluminum. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Simec SAB is 1.29 times less risky than Century Aluminum. The stock trades about -0.02 of its potential returns per unit of risk. The Century Aluminum is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 745.00 in Century Aluminum on August 29, 2024 and sell it today you would earn a total of 1,559 from holding Century Aluminum or generate 209.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 82.05% |
| Values | Daily Returns |
Grupo Simec SAB vs. Century Aluminum
Performance |
| Timeline |
| Grupo Simec SAB |
| Century Aluminum |
Grupo Simec and Century Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Simec and Century Aluminum
The main advantage of trading using opposite Grupo Simec and Century Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Simec position performs unexpectedly, Century Aluminum 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 Century Aluminum will offset losses from the drop in Century Aluminum's long position.| Grupo Simec vs. Synalloy | Grupo Simec vs. Mesabi Trust | Grupo Simec vs. Algoma Steel Group | Grupo Simec vs. Olympic Steel |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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