Correlation Between Grupo Simec and HE Equipment

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Can any of the company-specific risk be diversified away by investing in both Grupo Simec and HE Equipment 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 HE Equipment 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 HE Equipment Services, you can compare the effects of market volatilities on Grupo Simec and HE Equipment 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 HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Simec and HE Equipment.

Diversification Opportunities for Grupo Simec and HE Equipment

-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Grupo and HEES is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services 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 HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of Grupo Simec i.e., Grupo Simec and HE Equipment go up and down completely randomly.

Pair Corralation between Grupo Simec and HE Equipment

Considering the 90-day investment horizon Grupo Simec SAB is expected to under-perform the HE Equipment. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Simec SAB is 1.67 times less risky than HE Equipment. The stock trades about -0.01 of its potential returns per unit of risk. The HE Equipment Services is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5,293  in HE Equipment Services on August 31, 2024 and sell it today you would earn a total of  640.00  from holding HE Equipment Services or generate 12.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Grupo Simec SAB  vs.  HE Equipment Services

 Performance 
       Timeline  
Grupo Simec SAB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grupo Simec SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Grupo Simec is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
HE Equipment Services 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in HE Equipment Services are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, HE Equipment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Grupo Simec and HE Equipment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grupo Simec and HE Equipment

The main advantage of trading using opposite Grupo Simec and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Simec position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment's long position.
The idea behind Grupo Simec SAB and HE Equipment Services 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.
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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