Correlation Between Grupo Simec and Constellium
Can any of the company-specific risk be diversified away by investing in both Grupo Simec and Constellium 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 Constellium 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 Constellium Nv, you can compare the effects of market volatilities on Grupo Simec and Constellium 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 Constellium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Simec and Constellium.
Diversification Opportunities for Grupo Simec and Constellium
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grupo and Constellium is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and Constellium Nv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellium Nv 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 Constellium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellium Nv has no effect on the direction of Grupo Simec i.e., Grupo Simec and Constellium go up and down completely randomly.
Pair Corralation between Grupo Simec and Constellium
Considering the 90-day investment horizon Grupo Simec SAB is expected to generate 0.8 times more return on investment than Constellium. However, Grupo Simec SAB is 1.26 times less risky than Constellium. It trades about -0.01 of its potential returns per unit of risk. Constellium Nv is currently generating about -0.1 per unit of risk. If you would invest 2,937 in Grupo Simec SAB on September 12, 2024 and sell it today you would lose (181.00) from holding Grupo Simec SAB or give up 6.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.71% |
| Values | Daily Returns |
Grupo Simec SAB vs. Constellium Nv
Performance |
| Timeline |
| Grupo Simec SAB |
| Constellium Nv |
Grupo Simec and Constellium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Simec and Constellium
The main advantage of trading using opposite Grupo Simec and Constellium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Simec position performs unexpectedly, Constellium 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 Constellium will offset losses from the drop in Constellium's long position.| Grupo Simec vs. Nucor Corp | Grupo Simec vs. Steel Dynamics | Grupo Simec vs. ArcelorMittal SA ADR | Grupo Simec vs. Gerdau SA ADR |
| Constellium vs. Century Aluminum | Constellium vs. Alcoa Corp | Constellium vs. China Hongqiao Group | Constellium vs. Norsk Hydro ASA |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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