Correlation Between Grupo Simec and Stelco Holdings
Can any of the company-specific risk be diversified away by investing in both Grupo Simec and Stelco Holdings 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 Stelco Holdings 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 Stelco Holdings, you can compare the effects of market volatilities on Grupo Simec and Stelco Holdings 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 Stelco Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Simec and Stelco Holdings.
Diversification Opportunities for Grupo Simec and Stelco Holdings
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Grupo and Stelco is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and Stelco Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelco Holdings 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 Stelco Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelco Holdings has no effect on the direction of Grupo Simec i.e., Grupo Simec and Stelco Holdings go up and down completely randomly.
Pair Corralation between Grupo Simec and Stelco Holdings
Considering the 90-day investment horizon Grupo Simec SAB is expected to under-perform the Stelco Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Simec SAB is 1.31 times less risky than Stelco Holdings. The stock trades about -0.01 of its potential returns per unit of risk. The Stelco Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,944 in Stelco Holdings on August 28, 2024 and sell it today you would earn a total of 1,997 from holding Stelco Holdings or generate 67.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 92.7% |
| Values | Daily Returns |
Grupo Simec SAB vs. Stelco Holdings
Performance |
| Timeline |
| Grupo Simec SAB |
| Stelco Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Grupo Simec and Stelco Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Simec and Stelco Holdings
The main advantage of trading using opposite Grupo Simec and Stelco Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Simec position performs unexpectedly, Stelco Holdings 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 Stelco Holdings will offset losses from the drop in Stelco Holdings' long position.The idea behind Grupo Simec SAB and Stelco Holdings 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.| Stelco Holdings vs. Ascendant Resources | Stelco Holdings vs. Cantex Mine Development | Stelco Holdings vs. Amarc Resources | Stelco Holdings vs. Sterling Metals Corp |
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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