Correlation Between Grupo Simec and CVW CleanTech

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

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

Diversification Opportunities for Grupo Simec and CVW CleanTech

0.51

Correlation Coefficient

Grupo Simec  CVW CleanTech

Very weak diversification

The 3 months correlation between Grupo and CVW is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech and Grupo Simec 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 Grupo Simec SAB are associated (or correlated) with CVW CleanTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CleanTech has no effect on the direction of Grupo Simec i.e., Grupo Simec and CVW CleanTech go up and down completely randomly.

Pair Corralation between Grupo Simec and CVW CleanTech

Considering the 90-day investment horizon Grupo Simec is expected to generate 2.24 times less return on investment than CVW CleanTech. In addition to that, Grupo Simec is 1.29 times more volatile than CVW CleanTech. It trades about 0.0 of its total potential returns per unit of risk. CVW CleanTech is currently generating about 0.01 per unit of volatility. If you would invest  62.00  in CVW CleanTech on September 19, 2024 and sell it today you would earn a total of  0.00  from holding CVW CleanTech or generate 0.0% return on investment over 90 days.

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

Grupo Simec SAB  vs.  CVW CleanTech

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.

CVW CleanTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVW CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Grupo Simec and CVW CleanTech

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

The idea behind Grupo Simec SAB and CVW CleanTech 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.