Correlation Between Grupo Simec and HE Equipment

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

Diversification Opportunities for Grupo Simec and HE Equipment

-0.51

Correlation Coefficient

Grupo Simec  HE Equipment

Excellent diversification

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

Pair Corralation between Grupo Simec and HE Equipment

Considering the 90-day investment horizon Grupo Simec is expected to generate 9.62 times less return on investment than HE Equipment. In addition to that, Grupo Simec is 1.3 times more volatile than HE Equipment Services. It trades about 0.0 of its total potential returns per unit of risk. HE Equipment Services is currently generating about 0.02 per unit of volatility. If you would invest  4,334  in HE Equipment Services on September 20, 2024 and sell it today you would earn a total of  617.00  from holding HE Equipment Services or generate 14.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.48%
Values	Daily Returns

Grupo Simec SAB  vs.  HE Equipment Services

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.

HE Equipment Services

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HE Equipment Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, HE Equipment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Grupo Simec and HE Equipment

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

The idea behind Grupo Simec SAB and HE Equipment Services 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.