Correlation Between Grupo Simec and Synalloy

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

Diversification Opportunities for Grupo Simec and Synalloy

-0.08

Correlation Coefficient

Grupo Simec  Synalloy

Good diversification

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

Pair Corralation between Grupo Simec and Synalloy

Considering the 90-day investment horizon Grupo Simec SAB is expected to under-perform the Synalloy. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Simec SAB is 1.04 times less risky than Synalloy. The stock trades about -0.05 of its potential returns per unit of risk. The Synalloy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,031  in Synalloy on August 30, 2024 and sell it today you would earn a total of  57.00  from holding Synalloy or generate 5.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.38%
Values	Daily Returns

Grupo Simec SAB  vs.  Synalloy

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 latest uncertain performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Synalloy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Synalloy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Synalloy may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Grupo Simec and Synalloy

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

The idea behind Grupo Simec SAB and Synalloy 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.