Correlation Between Grupo Simec and IAMGOLD

Can any of the company-specific risk be diversified away by investing in both Grupo Simec and IAMGOLD 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 IAMGOLD 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 IAMGOLD P 575, you can compare the effects of market volatilities on Grupo Simec and IAMGOLD 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 IAMGOLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Simec and IAMGOLD.

Diversification Opportunities for Grupo Simec and IAMGOLD

0.27

Correlation Coefficient

Grupo Simec  IAMGOLD

Modest diversification

The 3 months correlation between Grupo and IAMGOLD is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and IAMGOLD P 575 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAMGOLD P 575 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 IAMGOLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAMGOLD P 575 has no effect on the direction of Grupo Simec i.e., Grupo Simec and IAMGOLD go up and down completely randomly.

Pair Corralation between Grupo Simec and IAMGOLD

Considering the 90-day investment horizon Grupo Simec SAB is expected to under-perform the IAMGOLD. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Simec SAB is 4.18 times less risky than IAMGOLD. The stock trades about -0.02 of its potential returns per unit of risk. The IAMGOLD P 575 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9,432  in IAMGOLD P 575 on September 29, 2024 and sell it today you would lose (1,720) from holding IAMGOLD P 575 or give up 18.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.43%
Values	Daily Returns

Grupo Simec SAB  vs.  IAMGOLD P 575

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.

IAMGOLD P 575

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IAMGOLD P 575 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for IAMGOLD P 575 investors.

Pair Trading with Grupo Simec and IAMGOLD

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

The idea behind Grupo Simec SAB and IAMGOLD P 575 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.