Correlation Between Grupo Simec and Green Shift

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

Diversification Opportunities for Grupo Simec and Green Shift

0.46

Correlation Coefficient

Grupo Simec  Green Shift

Very weak diversification

The 3 months correlation between Grupo and Green is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and Green Shift Commodities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Shift Commodities 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 Green Shift. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Shift Commodities has no effect on the direction of Grupo Simec i.e., Grupo Simec and Green Shift go up and down completely randomly.

Pair Corralation between Grupo Simec and Green Shift

Considering the 90-day investment horizon Grupo Simec is expected to generate 1.23 times less return on investment than Green Shift. But when comparing it to its historical volatility, Grupo Simec SAB is 4.27 times less risky than Green Shift. It trades about 0.1 of its potential returns per unit of risk. Green Shift Commodities is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3.48  in Green Shift Commodities on September 13, 2024 and sell it today you would lose (0.09) from holding Green Shift Commodities or give up 2.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Grupo Simec SAB  vs.  Green Shift Commodities

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.

Green Shift Commodities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Grupo Simec and Green Shift

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

The idea behind Grupo Simec SAB and Green Shift Commodities 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.