Correlation Between Grupo Simec and Companhia Siderurgica
Can any of the company-specific risk be diversified away by investing in both Grupo Simec and Companhia Siderurgica 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 Companhia Siderurgica 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 Companhia Siderurgica Nacional, you can compare the effects of market volatilities on Grupo Simec and Companhia Siderurgica 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 Companhia Siderurgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Simec and Companhia Siderurgica.
Diversification Opportunities for Grupo Simec and Companhia Siderurgica
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grupo and Companhia is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and Companhia Siderurgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderurgica 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 Companhia Siderurgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderurgica has no effect on the direction of Grupo Simec i.e., Grupo Simec and Companhia Siderurgica go up and down completely randomly.
Pair Corralation between Grupo Simec and Companhia Siderurgica
Considering the 90-day investment horizon Grupo Simec SAB is expected to generate 0.7 times more return on investment than Companhia Siderurgica. However, Grupo Simec SAB is 1.42 times less risky than Companhia Siderurgica. It trades about 0.1 of its potential returns per unit of risk. Companhia Siderurgica Nacional is currently generating about -0.03 per unit of risk. If you would invest 2,650 in Grupo Simec SAB on September 12, 2024 and sell it today you would earn a total of 106.00 from holding Grupo Simec SAB or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Simec SAB vs. Companhia Siderurgica Nacional
Performance |
| Timeline |
| Grupo Simec SAB |
| Companhia Siderurgica |
Grupo Simec and Companhia Siderurgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Simec and Companhia Siderurgica
The main advantage of trading using opposite Grupo Simec and Companhia Siderurgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Simec position performs unexpectedly, Companhia Siderurgica 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 Companhia Siderurgica will offset losses from the drop in Companhia Siderurgica'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 |
| Companhia Siderurgica vs. Ternium SA ADR | Companhia Siderurgica vs. ArcelorMittal SA ADR | Companhia Siderurgica vs. Commercial Metals | Companhia Siderurgica vs. Outokumpu Oyj ADR |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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