Correlation Between Synalloy and Grupo Simec

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

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

Diversification Opportunities for Synalloy and Grupo Simec

0.12

Correlation Coefficient

Synalloy  Grupo Simec

Average diversification

The 3 months correlation between Synalloy and Grupo is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Synalloy 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 Synalloy 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 Synalloy 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 Synalloy i.e., Synalloy and Grupo Simec go up and down completely randomly.

Pair Corralation between Synalloy and Grupo Simec

Given the investment horizon of 90 days Synalloy is expected to generate 0.41 times more return on investment than Grupo Simec. However, Synalloy is 2.46 times less risky than Grupo Simec. It trades about 0.14 of its potential returns per unit of risk. Grupo Simec SAB is currently generating about 0.0 per unit of risk. If you would invest  1,125  in Synalloy on December 28, 2024 and sell it today you would earn a total of  148.00  from holding Synalloy or generate 13.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Synalloy  vs.  Grupo Simec SAB

Synalloy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Synalloy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Synalloy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Grupo Simec SAB

Risk-Adjusted Performance

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.

Pair Trading with Synalloy and Grupo Simec

The main advantage of trading using opposite Synalloy and Grupo Simec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synalloy 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 Synalloy 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 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.