Correlation Between KinderCare Learning and Grupo Simec

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

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

Diversification Opportunities for KinderCare Learning and Grupo Simec

-0.08

Correlation Coefficient

KinderCare Learning  Grupo Simec

Good diversification

The 3 months correlation between KinderCare and Grupo is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding KinderCare Learning Companies, 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 KinderCare Learning 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 KinderCare Learning Companies, 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 KinderCare Learning i.e., KinderCare Learning and Grupo Simec go up and down completely randomly.

Pair Corralation between KinderCare Learning and Grupo Simec

Considering the 90-day investment horizon KinderCare Learning Companies, is expected to under-perform the Grupo Simec. In addition to that, KinderCare Learning is 1.14 times more volatile than Grupo Simec SAB. It trades about -0.07 of its total potential returns per unit of risk. Grupo Simec SAB is currently generating about 0.0 per unit of volatility. If you would invest  3,310  in Grupo Simec SAB on October 27, 2024 and sell it today you would lose (667.00) from holding Grupo Simec SAB or give up 20.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	16.74%
Values	Daily Returns

KinderCare Learning Companies,  vs.  Grupo Simec SAB

KinderCare Learning

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KinderCare Learning Companies, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with KinderCare Learning and Grupo Simec

The main advantage of trading using opposite KinderCare Learning and Grupo Simec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KinderCare Learning 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 KinderCare Learning Companies, 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.