Correlation Between GEN Restaurant and Grupo Simec

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

By analyzing existing cross correlation between GEN Restaurant Group, and Grupo Simec SAB, you can compare the effects of market volatilities on GEN Restaurant and Grupo Simec 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 GEN Restaurant with a short position of Grupo Simec. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEN Restaurant and Grupo Simec.

Diversification Opportunities for GEN Restaurant and Grupo Simec

-0.08

Correlation Coefficient

GEN Restaurant  Grupo Simec

Good diversification

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

Pair Corralation between GEN Restaurant and Grupo Simec

Given the investment horizon of 90 days GEN Restaurant Group, is expected to generate 1.28 times more return on investment than Grupo Simec. However, GEN Restaurant is 1.28 times more volatile than Grupo Simec SAB. It trades about -0.02 of its potential returns per unit of risk. Grupo Simec SAB is currently generating about -0.03 per unit of risk. If you would invest  823.00  in GEN Restaurant Group, on September 26, 2024 and sell it today you would lose (76.00) from holding GEN Restaurant Group, or give up 9.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.89%
Values	Daily Returns

GEN Restaurant Group,  vs.  Grupo Simec SAB

GEN Restaurant Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEN Restaurant Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, GEN Restaurant is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Grupo Simec SAB

Risk-Adjusted Performance

0 of 100

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 newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GEN Restaurant and Grupo Simec

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

The idea behind GEN Restaurant Group, and Grupo Simec SAB 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 CEOs Directory module to screen CEOs from public companies around the world.