Correlation Between Grupo Simec and Molson Coors

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

Diversification Opportunities for Grupo Simec and Molson Coors

-0.46

Correlation Coefficient

Grupo Simec  Molson Coors

Very good diversification

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

Pair Corralation between Grupo Simec and Molson Coors

Considering the 90-day investment horizon Grupo Simec SAB is expected to under-perform the Molson Coors. In addition to that, Grupo Simec is 1.72 times more volatile than Molson Coors Brewing. It trades about -0.01 of its total potential returns per unit of risk. Molson Coors Brewing is currently generating about 0.01 per unit of volatility. If you would invest  6,005  in Molson Coors Brewing on September 12, 2024 and sell it today you would earn a total of  134.00  from holding Molson Coors Brewing or generate 2.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	79.84%
Values	Daily Returns

Grupo Simec SAB  vs.  Molson Coors Brewing

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

Molson Coors Brewing

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Molson Coors reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Simec and Molson Coors

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

The idea behind Grupo Simec SAB and Molson Coors Brewing 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.