Correlation Between SIMS and SIMS METAL

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

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

Diversification Opportunities for SIMS and SIMS METAL

0.0

Correlation Coefficient

SIMS  SIMS METAL

Pay attention - limited upside

The 3 months correlation between SIMS and SIMS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SIMS LTD ADR and SIMS METAL MGT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMS METAL MGT and SIMS 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 LTD ADR are associated (or correlated) with SIMS METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMS METAL MGT has no effect on the direction of SIMS i.e., SIMS and SIMS METAL go up and down completely randomly.

Pair Corralation between SIMS and SIMS METAL

If you would invest  0.00  in SIMS LTD ADR on October 7, 2024 and sell it today you would earn a total of  0.00  from holding SIMS LTD ADR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.44%
Values	Daily Returns

SIMS LTD ADR  vs.  SIMS METAL MGT

SIMS LTD ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMS LTD ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, SIMS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SIMS METAL MGT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMS METAL MGT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, SIMS METAL is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SIMS and SIMS METAL

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

The idea behind SIMS LTD ADR and SIMS METAL MGT 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 Commodity Directory module to find actively traded commodities issued by global exchanges.