Correlation Between Grupo Simec and Kaiser Aluminum

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

Diversification Opportunities for Grupo Simec and Kaiser Aluminum

0.22

Correlation Coefficient

Grupo Simec  Kaiser Aluminum

Modest diversification

The 3 months correlation between Grupo and Kaiser is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Grupo Simec i.e., Grupo Simec and Kaiser Aluminum go up and down completely randomly.

Pair Corralation between Grupo Simec and Kaiser Aluminum

Considering the 90-day investment horizon Grupo Simec SAB is expected to under-perform the Kaiser Aluminum. In addition to that, Grupo Simec is 1.27 times more volatile than Kaiser Aluminum. It trades about -0.02 of its total potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.01 per unit of volatility. If you would invest  7,229  in Kaiser Aluminum on December 5, 2024 and sell it today you would lose (367.00) from holding Kaiser Aluminum or give up 5.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	84.87%
Values	Daily Returns

Grupo Simec SAB  vs.  Kaiser Aluminum

Grupo Simec SAB

Risk-Adjusted Performance

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 newest stock price disarray, may contribute to short-term losses for the investors.

Kaiser Aluminum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kaiser Aluminum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Grupo Simec and Kaiser Aluminum

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

The idea behind Grupo Simec SAB and Kaiser Aluminum 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.