Correlation Between Sims and MoneyMe
Can any of the company-specific risk be diversified away by investing in both Sims and MoneyMe 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 MoneyMe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sims and MoneyMe, you can compare the effects of market volatilities on Sims and MoneyMe 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 MoneyMe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims and MoneyMe.
Diversification Opportunities for Sims and MoneyMe
Very good diversification
The 3 months correlation between Sims and MoneyMe is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sims and MoneyMe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MoneyMe 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 are associated (or correlated) with MoneyMe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MoneyMe has no effect on the direction of Sims i.e., Sims and MoneyMe go up and down completely randomly.
Pair Corralation between Sims and MoneyMe
Assuming the 90 days trading horizon Sims is expected to under-perform the MoneyMe. But the stock apears to be less risky and, when comparing its historical volatility, Sims is 3.05 times less risky than MoneyMe. The stock trades about -0.22 of its potential returns per unit of risk. The MoneyMe is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 12.00 in MoneyMe on September 24, 2024 and sell it today you would earn a total of 5.00 from holding MoneyMe or generate 41.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Sims vs. MoneyMe
Performance |
Timeline |
Sims |
MoneyMe |
Sims and MoneyMe Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sims and MoneyMe
The main advantage of trading using opposite Sims and MoneyMe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims position performs unexpectedly, MoneyMe 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 MoneyMe will offset losses from the drop in MoneyMe's long position.Sims vs. Northern Star Resources | Sims vs. Evolution Mining | Sims vs. Bluescope Steel | Sims vs. Aneka Tambang Tbk |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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