Correlation Between HNI Corp and Grupo Simec

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

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

Diversification Opportunities for HNI Corp and Grupo Simec

-0.24

Correlation Coefficient

HNI Corp  Grupo Simec

Very good diversification

The 3 months correlation between HNI and Grupo is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding HNI Corp 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 HNI Corp 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 HNI Corp 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 HNI Corp i.e., HNI Corp and Grupo Simec go up and down completely randomly.

Pair Corralation between HNI Corp and Grupo Simec

Considering the 90-day investment horizon HNI Corp is expected to generate 0.53 times more return on investment than Grupo Simec. However, HNI Corp is 1.9 times less risky than Grupo Simec. It trades about 0.03 of its potential returns per unit of risk. Grupo Simec SAB is currently generating about -0.03 per unit of risk. If you would invest  5,270  in HNI Corp on September 18, 2024 and sell it today you would earn a total of  107.00  from holding HNI Corp or generate 2.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.89%
Values	Daily Returns

HNI Corp  vs.  Grupo Simec SAB

HNI Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HNI Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, HNI Corp is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the 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 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 HNI Corp and Grupo Simec

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