Correlation Between First Ship and Grupo Simec

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

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

Diversification Opportunities for First Ship and Grupo Simec

0.0

Correlation Coefficient

First Ship  Grupo Simec

Pay attention - limited upside

The 3 months correlation between First and Grupo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Ship Lease 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 First Ship 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 First Ship Lease 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 First Ship i.e., First Ship and Grupo Simec go up and down completely randomly.

Pair Corralation between First Ship and Grupo Simec

Assuming the 90 days horizon First Ship Lease is expected to generate 0.79 times more return on investment than Grupo Simec. However, First Ship Lease is 1.27 times less risky than Grupo Simec. It trades about 0.04 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  2.50  in First Ship Lease on September 19, 2024 and sell it today you would earn a total of  1.50  from holding First Ship Lease or generate 60.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	88.51%
Values	Daily Returns

First Ship Lease  vs.  Grupo Simec SAB

First Ship Lease

Risk-Adjusted Performance

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Very Weak

Over the last 90 days First Ship Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, First Ship is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with First Ship and Grupo Simec

The main advantage of trading using opposite First Ship and Grupo Simec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Ship 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 First Ship Lease 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.