Correlation Between Grupo Simec and Mosaic

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

Diversification Opportunities for Grupo Simec and Mosaic

-0.04

Correlation Coefficient

Grupo Simec  Mosaic

Good diversification

The 3 months correlation between Grupo and Mosaic is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and The Mosaic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mosaic 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 Mosaic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mosaic has no effect on the direction of Grupo Simec i.e., Grupo Simec and Mosaic go up and down completely randomly.

Pair Corralation between Grupo Simec and Mosaic

Considering the 90-day investment horizon Grupo Simec is expected to generate 6.17 times less return on investment than Mosaic. In addition to that, Grupo Simec is 1.66 times more volatile than The Mosaic. It trades about 0.01 of its total potential returns per unit of risk. The Mosaic is currently generating about 0.11 per unit of volatility. If you would invest  2,365  in The Mosaic on December 27, 2024 and sell it today you would earn a total of  347.00  from holding The Mosaic or generate 14.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Grupo Simec SAB  vs.  The Mosaic

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.

Mosaic

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Mosaic are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Mosaic unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Simec and Mosaic

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

The idea behind Grupo Simec SAB and The Mosaic 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.