Correlation Between Grupo Simec and BlueScope Steel

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

Diversification Opportunities for Grupo Simec and BlueScope Steel

0.26

Correlation Coefficient

Grupo Simec  BlueScope Steel

Modest diversification

The 3 months correlation between Grupo and BlueScope is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and BlueScope Steel Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlueScope Steel 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 BlueScope Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlueScope Steel has no effect on the direction of Grupo Simec i.e., Grupo Simec and BlueScope Steel go up and down completely randomly.

Pair Corralation between Grupo Simec and BlueScope Steel

Considering the 90-day investment horizon Grupo Simec SAB is expected to under-perform the BlueScope Steel. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Simec SAB is 1.3 times less risky than BlueScope Steel. The stock trades about -0.01 of its potential returns per unit of risk. The BlueScope Steel Ltd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6,464  in BlueScope Steel Ltd on September 14, 2024 and sell it today you would earn a total of  1.00  from holding BlueScope Steel Ltd or generate 0.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.3%
Values	Daily Returns

Grupo Simec SAB  vs.  BlueScope Steel Ltd

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

BlueScope Steel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BlueScope Steel Ltd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, BlueScope Steel is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grupo Simec and BlueScope Steel

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

The idea behind Grupo Simec SAB and BlueScope Steel Ltd 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 Stocks Directory module to find actively traded stocks across global markets.