Correlation Between Grupo Simec and ONCOR

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

Diversification Opportunities for Grupo Simec and ONCOR

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Grupo and ONCOR is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and ONCOR ELEC DELIVERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONCOR ELEC DELIVERY 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 ONCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONCOR ELEC DELIVERY has no effect on the direction of Grupo Simec i.e., Grupo Simec and ONCOR go up and down completely randomly.

Pair Corralation between Grupo Simec and ONCOR

Considering the 90-day investment horizon Grupo Simec is expected to generate 4.68 times less return on investment than ONCOR. In addition to that, Grupo Simec is 1.07 times more volatile than ONCOR ELEC DELIVERY. It trades about 0.1 of its total potential returns per unit of risk. ONCOR ELEC DELIVERY is currently generating about 0.49 per unit of volatility. If you would invest  8,229  in ONCOR ELEC DELIVERY on September 12, 2024 and sell it today you would earn a total of  862.00  from holding ONCOR ELEC DELIVERY or generate 10.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy50.0%
ValuesDaily Returns

Grupo Simec SAB  vs.  ONCOR ELEC DELIVERY

 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.
ONCOR ELEC DELIVERY 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ONCOR ELEC DELIVERY are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, ONCOR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Grupo Simec and ONCOR Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grupo Simec and ONCOR

The main advantage of trading using opposite Grupo Simec and ONCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Simec position performs unexpectedly, ONCOR 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 ONCOR will offset losses from the drop in ONCOR's long position.
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The idea behind Grupo Simec SAB and ONCOR ELEC DELIVERY 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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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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