Correlation Between SIMS METAL and MongoDB

Can any of the company-specific risk be diversified away by investing in both SIMS METAL and MongoDB 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 MongoDB 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 MongoDB, you can compare the effects of market volatilities on SIMS METAL and MongoDB 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 MongoDB. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMS METAL and MongoDB.

Diversification Opportunities for SIMS METAL and MongoDB

-0.17

Correlation Coefficient

SIMS METAL  MongoDB

Good diversification

The 3 months correlation between SIMS and MongoDB is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SIMS METAL MGT and MongoDB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MongoDB 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 MongoDB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MongoDB has no effect on the direction of SIMS METAL i.e., SIMS METAL and MongoDB go up and down completely randomly.

Pair Corralation between SIMS METAL and MongoDB

Assuming the 90 days trading horizon SIMS METAL MGT is expected to generate 0.54 times more return on investment than MongoDB. However, SIMS METAL MGT is 1.85 times less risky than MongoDB. It trades about 0.16 of its potential returns per unit of risk. MongoDB is currently generating about -0.06 per unit of risk. If you would invest  695.00  in SIMS METAL MGT on December 29, 2024 and sell it today you would earn a total of  165.00  from holding SIMS METAL MGT or generate 23.74% return on investment over 90 days.

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

SIMS METAL MGT  vs.  MongoDB

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 12 (%) 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.

MongoDB

Risk-Adjusted Performance

Very Weak

Over the last 90 days MongoDB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SIMS METAL and MongoDB

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

The idea behind SIMS METAL MGT and MongoDB 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.