Correlation Between SIMS METAL and GFL ENVIRONM(SUBVTSH

Can any of the company-specific risk be diversified away by investing in both SIMS METAL and GFL ENVIRONM(SUBVTSH 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 SIMS METAL and GFL ENVIRONM(SUBVTSH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SIMS METAL MGT and GFL ENVIRONM, you can compare the effects of market volatilities on SIMS METAL and GFL ENVIRONM(SUBVTSH 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 SIMS METAL with a short position of GFL ENVIRONM(SUBVTSH. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMS METAL and GFL ENVIRONM(SUBVTSH.

Diversification Opportunities for SIMS METAL and GFL ENVIRONM(SUBVTSH

0.09

Correlation Coefficient

SIMS METAL  GFL ENVIRONM(SUBVTSH

Significant diversification

The 3 months correlation between SIMS and GFL is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding SIMS METAL MGT and GFL ENVIRONM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFL ENVIRONM(SUBVTSH and SIMS METAL 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 SIMS METAL MGT are associated (or correlated) with GFL ENVIRONM(SUBVTSH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFL ENVIRONM(SUBVTSH has no effect on the direction of SIMS METAL i.e., SIMS METAL and GFL ENVIRONM(SUBVTSH go up and down completely randomly.

Pair Corralation between SIMS METAL and GFL ENVIRONM(SUBVTSH

Assuming the 90 days trading horizon SIMS METAL MGT is expected to generate 1.27 times more return on investment than GFL ENVIRONM(SUBVTSH. However, SIMS METAL is 1.27 times more volatile than GFL ENVIRONM. It trades about 0.18 of its potential returns per unit of risk. GFL ENVIRONM is currently generating about 0.04 per unit of risk. If you would invest  695.00  in SIMS METAL MGT on December 27, 2024 and sell it today you would earn a total of  185.00  from holding SIMS METAL MGT or generate 26.62% return on investment over 90 days.

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

SIMS METAL MGT  vs.  GFL ENVIRONM

SIMS METAL MGT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SIMS METAL MGT are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, SIMS METAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

GFL ENVIRONM(SUBVTSH

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GFL ENVIRONM are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, GFL ENVIRONM(SUBVTSH is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SIMS METAL and GFL ENVIRONM(SUBVTSH

The main advantage of trading using opposite SIMS METAL and GFL ENVIRONM(SUBVTSH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMS METAL position performs unexpectedly, GFL ENVIRONM(SUBVTSH 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 GFL ENVIRONM(SUBVTSH will offset losses from the drop in GFL ENVIRONM(SUBVTSH's long position.

The idea behind SIMS METAL MGT and GFL ENVIRONM 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.