Correlation Between Grupo Simec and 00185AAK0

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Can any of the company-specific risk be diversified away by investing in both Grupo Simec and 00185AAK0 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 00185AAK0 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 AON PLC 3875, you can compare the effects of market volatilities on Grupo Simec and 00185AAK0 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 00185AAK0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Simec and 00185AAK0.

Diversification Opportunities for Grupo Simec and 00185AAK0

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Grupo and 00185AAK0 is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and AON PLC 3875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AON PLC 3875 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 00185AAK0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AON PLC 3875 has no effect on the direction of Grupo Simec i.e., Grupo Simec and 00185AAK0 go up and down completely randomly.

Pair Corralation between Grupo Simec and 00185AAK0

Considering the 90-day investment horizon Grupo Simec SAB is expected to under-perform the 00185AAK0. In addition to that, Grupo Simec is 18.16 times more volatile than AON PLC 3875. It trades about 0.0 of its total potential returns per unit of risk. AON PLC 3875 is currently generating about 0.03 per unit of volatility. If you would invest  9,696  in AON PLC 3875 on August 31, 2024 and sell it today you would earn a total of  213.00  from holding AON PLC 3875 or generate 2.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy85.91%
ValuesDaily Returns

Grupo Simec SAB  vs.  AON PLC 3875

 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.
AON PLC 3875 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AON PLC 3875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00185AAK0 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Grupo Simec and 00185AAK0 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grupo Simec and 00185AAK0

The main advantage of trading using opposite Grupo Simec and 00185AAK0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Simec position performs unexpectedly, 00185AAK0 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 00185AAK0 will offset losses from the drop in 00185AAK0's long position.
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The idea behind Grupo Simec SAB and AON PLC 3875 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.
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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