Correlation Between SIMPAR SA and EOG Resources

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

By analyzing existing cross correlation between SIMPAR SA and EOG Resources, you can compare the effects of market volatilities on SIMPAR SA and EOG Resources 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 SIMPAR SA with a short position of EOG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMPAR SA and EOG Resources.

Diversification Opportunities for SIMPAR SA and EOG Resources

-0.7

Correlation Coefficient

SIMPAR SA  EOG Resources

Excellent diversification

The 3 months correlation between SIMPAR and EOG is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding SIMPAR SA and EOG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOG Resources and SIMPAR SA 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 SIMPAR SA are associated (or correlated) with EOG Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOG Resources has no effect on the direction of SIMPAR SA i.e., SIMPAR SA and EOG Resources go up and down completely randomly.

Pair Corralation between SIMPAR SA and EOG Resources

Assuming the 90 days trading horizon SIMPAR SA is expected to under-perform the EOG Resources. In addition to that, SIMPAR SA is 1.71 times more volatile than EOG Resources. It trades about -0.13 of its total potential returns per unit of risk. EOG Resources is currently generating about 0.11 per unit of volatility. If you would invest  34,136  in EOG Resources on September 13, 2024 and sell it today you would earn a total of  4,552  from holding EOG Resources or generate 13.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

SIMPAR SA  vs.  EOG Resources

SIMPAR SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMPAR SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

EOG Resources

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EOG Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, EOG Resources sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIMPAR SA and EOG Resources

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

The idea behind SIMPAR SA and EOG Resources 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.