Correlation Between Ironveld Plc and Grupo Simec

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

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

Diversification Opportunities for Ironveld Plc and Grupo Simec

0.0

Correlation Coefficient

Ironveld Plc  Grupo Simec

Pay attention - limited upside

The 3 months correlation between Ironveld and Grupo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ironveld Plc 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 Ironveld Plc 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 Ironveld Plc 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 Ironveld Plc i.e., Ironveld Plc and Grupo Simec go up and down completely randomly.

Pair Corralation between Ironveld Plc and Grupo Simec

Assuming the 90 days horizon Ironveld Plc is expected to generate 1.28 times more return on investment than Grupo Simec. However, Ironveld Plc is 1.28 times more volatile than Grupo Simec SAB. It trades about 0.09 of its potential returns per unit of risk. Grupo Simec SAB is currently generating about 0.01 per unit of risk. If you would invest  0.02  in Ironveld Plc on September 18, 2024 and sell it today you would earn a total of  0.01  from holding Ironveld Plc or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	29.0%
Values	Daily Returns

Ironveld Plc  vs.  Grupo Simec SAB

Ironveld Plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Ironveld Plc and Grupo Simec

The main advantage of trading using opposite Ironveld Plc and Grupo Simec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ironveld Plc 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 Ironveld Plc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.