Correlation Between Sims Metal and ARITZIA INCSUBVTGSHS

Can any of the company-specific risk be diversified away by investing in both Sims Metal and ARITZIA INCSUBVTGSHS 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 ARITZIA INCSUBVTGSHS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sims Metal Management and ARITZIA INCSUBVTGSHS, you can compare the effects of market volatilities on Sims Metal and ARITZIA INCSUBVTGSHS 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 ARITZIA INCSUBVTGSHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and ARITZIA INCSUBVTGSHS.

Diversification Opportunities for Sims Metal and ARITZIA INCSUBVTGSHS

0.49

Correlation Coefficient

Sims Metal  ARITZIA INCSUBVTGSHS

Very weak diversification

The 3 months correlation between Sims and ARITZIA is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and ARITZIA INCSUBVTGSHS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARITZIA INCSUBVTGSHS 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 Management are associated (or correlated) with ARITZIA INCSUBVTGSHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARITZIA INCSUBVTGSHS has no effect on the direction of Sims Metal i.e., Sims Metal and ARITZIA INCSUBVTGSHS go up and down completely randomly.

Pair Corralation between Sims Metal and ARITZIA INCSUBVTGSHS

Assuming the 90 days horizon Sims Metal Management is expected to generate 0.49 times more return on investment than ARITZIA INCSUBVTGSHS. However, Sims Metal Management is 2.02 times less risky than ARITZIA INCSUBVTGSHS. It trades about 0.2 of its potential returns per unit of risk. ARITZIA INCSUBVTGSHS is currently generating about 0.0 per unit of risk. If you would invest  710.00  in Sims Metal Management on December 20, 2024 and sell it today you would earn a total of  170.00  from holding Sims Metal Management or generate 23.94% return on investment over 90 days.

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

Sims Metal Management  vs.  ARITZIA INCSUBVTGSHS

Sims Metal Management

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sims Metal Management are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sims Metal reported solid returns over the last few months and may actually be approaching a breakup point.

ARITZIA INCSUBVTGSHS

Risk-Adjusted Performance

Very Weak

Over the last 90 days ARITZIA INCSUBVTGSHS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ARITZIA INCSUBVTGSHS 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 ARITZIA INCSUBVTGSHS

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

The idea behind Sims Metal Management and ARITZIA INCSUBVTGSHS 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.