Correlation Between Grupo Simec and Nippon Steel

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

Diversification Opportunities for Grupo Simec and Nippon Steel

-0.37

Correlation Coefficient

Grupo Simec  Nippon Steel

Very good diversification

The 3 months correlation between Grupo and Nippon is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and Nippon Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Steel Corp 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 Nippon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Steel Corp has no effect on the direction of Grupo Simec i.e., Grupo Simec and Nippon Steel go up and down completely randomly.

Pair Corralation between Grupo Simec and Nippon Steel

Considering the 90-day investment horizon Grupo Simec is expected to generate 3.53 times less return on investment than Nippon Steel. In addition to that, Grupo Simec is 2.94 times more volatile than Nippon Steel Corp. It trades about 0.03 of its total potential returns per unit of risk. Nippon Steel Corp is currently generating about 0.27 per unit of volatility. If you would invest  635.00  in Nippon Steel Corp on December 21, 2024 and sell it today you would earn a total of  149.00  from holding Nippon Steel Corp or generate 23.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.92%
Values	Daily Returns

Grupo Simec SAB  vs.  Nippon Steel Corp

Grupo Simec SAB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Simec SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, Grupo Simec may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nippon Steel Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Steel Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Nippon Steel showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Simec and Nippon Steel

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

The idea behind Grupo Simec SAB and Nippon Steel Corp 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.