Correlation Between Siamgas and SIMS METAL

Can any of the company-specific risk be diversified away by investing in both Siamgas and SIMS METAL 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 Siamgas and SIMS METAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Siamgas And Petrochemicals and SIMS METAL MGT, you can compare the effects of market volatilities on Siamgas and SIMS METAL 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 Siamgas with a short position of SIMS METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siamgas and SIMS METAL.

Diversification Opportunities for Siamgas and SIMS METAL

0.33

Correlation Coefficient

Siamgas  SIMS METAL

Weak diversification

The 3 months correlation between Siamgas and SIMS is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Siamgas And Petrochemicals and SIMS METAL MGT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMS METAL MGT and Siamgas 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 Siamgas And Petrochemicals are associated (or correlated) with SIMS METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMS METAL MGT has no effect on the direction of Siamgas i.e., Siamgas and SIMS METAL go up and down completely randomly.

Pair Corralation between Siamgas and SIMS METAL

Assuming the 90 days trading horizon Siamgas And Petrochemicals is expected to under-perform the SIMS METAL. In addition to that, Siamgas is 1.32 times more volatile than SIMS METAL MGT. It trades about -0.02 of its total potential returns per unit of risk. SIMS METAL MGT is currently generating about 0.06 per unit of volatility. If you would invest  706.00  in SIMS METAL MGT on September 19, 2024 and sell it today you would earn a total of  49.00  from holding SIMS METAL MGT or generate 6.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Siamgas And Petrochemicals  vs.  SIMS METAL MGT

Siamgas And Petroche

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Siamgas And Petrochemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Siamgas is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SIMS METAL MGT

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SIMS METAL MGT are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, SIMS METAL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Siamgas and SIMS METAL

The main advantage of trading using opposite Siamgas and SIMS METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siamgas position performs unexpectedly, SIMS METAL 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 SIMS METAL will offset losses from the drop in SIMS METAL's long position.

The idea behind Siamgas And Petrochemicals and SIMS METAL MGT 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.