Correlation Between Gold Fields and Grupo Simec

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

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

Diversification Opportunities for Gold Fields and Grupo Simec

0.34

Correlation Coefficient

Gold Fields  Grupo Simec

Weak diversification

The 3 months correlation between Gold and Grupo is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd 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 Gold Fields 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 Gold Fields Ltd 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 Gold Fields i.e., Gold Fields and Grupo Simec go up and down completely randomly.

Pair Corralation between Gold Fields and Grupo Simec

Considering the 90-day investment horizon Gold Fields Ltd is expected to under-perform the Grupo Simec. But the stock apears to be less risky and, when comparing its historical volatility, Gold Fields Ltd is 1.27 times less risky than Grupo Simec. The stock trades about -0.25 of its potential returns per unit of risk. The Grupo Simec SAB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,577  in Grupo Simec SAB on September 24, 2024 and sell it today you would earn a total of  75.00  from holding Grupo Simec SAB or generate 2.91% return on investment over 90 days.

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

Gold Fields Ltd  vs.  Grupo Simec SAB

Gold Fields

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gold Fields Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

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 latest unfluctuating performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Gold Fields and Grupo Simec

The main advantage of trading using opposite Gold Fields and Grupo Simec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields 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 Gold Fields Ltd 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.