Correlation Between United States and Grupo Simec

Can any of the company-specific risk be diversified away by investing in both United States and Grupo Simec 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 United States and Grupo Simec into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United States Steel and Grupo Simec SAB, you can compare the effects of market volatilities on United States and Grupo Simec 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 United States with a short position of Grupo Simec. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Grupo Simec.

Diversification Opportunities for United States and Grupo Simec

0.42

Correlation Coefficient

United States  Grupo Simec

Very weak diversification

The 3 months correlation between United and Grupo is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Grupo Simec SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Simec SAB and United States 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 United States Steel are associated (or correlated) with Grupo Simec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Simec SAB has no effect on the direction of United States i.e., United States and Grupo Simec go up and down completely randomly.

Pair Corralation between United States and Grupo Simec

Given the investment horizon of 90 days United States Steel is expected to under-perform the Grupo Simec. In addition to that, United States is 35.91 times more volatile than Grupo Simec SAB. It trades about -0.35 of its total potential returns per unit of risk. Grupo Simec SAB is currently generating about -0.14 per unit of volatility. If you would invest  18,500  in Grupo Simec SAB on September 27, 2024 and sell it today you would lose (50.00) from holding Grupo Simec SAB or give up 0.27% of portfolio value over 90 days.

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

United States Steel  vs.  Grupo Simec SAB

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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. Despite somewhat strong primary indicators, Grupo Simec is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United States and Grupo Simec

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

The idea behind United States Steel and Grupo Simec SAB 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.