Correlation Between Grupo Simec and UNITED

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

Diversification Opportunities for Grupo Simec and UNITED

0.13

Correlation Coefficient

Grupo Simec  UNITED

Average diversification

The 3 months correlation between Grupo and UNITED is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and UNITED TECHNOLOGIES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED TECHNOLOGIES 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 UNITED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED TECHNOLOGIES has no effect on the direction of Grupo Simec i.e., Grupo Simec and UNITED go up and down completely randomly.

Pair Corralation between Grupo Simec and UNITED

Considering the 90-day investment horizon Grupo Simec is expected to generate 77.16 times less return on investment than UNITED. But when comparing it to its historical volatility, Grupo Simec SAB is 13.15 times less risky than UNITED. It trades about 0.01 of its potential returns per unit of risk. UNITED TECHNOLOGIES P is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,089  in UNITED TECHNOLOGIES P on September 14, 2024 and sell it today you would lose (178.00) from holding UNITED TECHNOLOGIES P or give up 1.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	89.94%
Values	Daily Returns

Grupo Simec SAB  vs.  UNITED TECHNOLOGIES P

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.

UNITED TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITED TECHNOLOGIES P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, UNITED is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grupo Simec and UNITED

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

The idea behind Grupo Simec SAB and UNITED TECHNOLOGIES P 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.