Correlation Between SIMS METAL and Siamgas

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

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

Diversification Opportunities for SIMS METAL and Siamgas

0.33

Correlation Coefficient

SIMS METAL  Siamgas

Weak diversification

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

Pair Corralation between SIMS METAL and Siamgas

Assuming the 90 days trading horizon SIMS METAL MGT is expected to generate 0.76 times more return on investment than Siamgas. However, SIMS METAL MGT is 1.32 times less risky than Siamgas. It trades about 0.06 of its potential returns per unit of risk. Siamgas And Petrochemicals is currently generating about -0.02 per unit of risk. 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

SIMS METAL MGT  vs.  Siamgas And Petrochemicals

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.

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.

Pair Trading with SIMS METAL and Siamgas

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

The idea behind SIMS METAL MGT and Siamgas And Petrochemicals 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.