Correlation Between Grupo Simec and Datadog

Can any of the company-specific risk be diversified away by investing in both Grupo Simec and Datadog 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 Datadog 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 Datadog, you can compare the effects of market volatilities on Grupo Simec and Datadog 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 Datadog. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Simec and Datadog.

Diversification Opportunities for Grupo Simec and Datadog

-0.42

Correlation Coefficient

Grupo Simec  Datadog

Very good diversification

The 3 months correlation between Grupo and Datadog is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and Datadog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datadog 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 Datadog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datadog has no effect on the direction of Grupo Simec i.e., Grupo Simec and Datadog go up and down completely randomly.

Pair Corralation between Grupo Simec and Datadog

Considering the 90-day investment horizon Grupo Simec SAB is expected to under-perform the Datadog. In addition to that, Grupo Simec is 1.05 times more volatile than Datadog. It trades about -0.02 of its total potential returns per unit of risk. Datadog is currently generating about 0.04 per unit of volatility. If you would invest  12,379  in Datadog on October 10, 2024 and sell it today you would earn a total of  1,809  from holding Datadog or generate 14.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.24%
Values	Daily Returns

Grupo Simec SAB  vs.  Datadog

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 latest uncertain performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Datadog

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Datadog may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Grupo Simec and Datadog

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

The idea behind Grupo Simec SAB and Datadog 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.