Correlation Between Grupo Simec and Turning Point

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

Diversification Opportunities for Grupo Simec and Turning Point

-0.54

Correlation Coefficient

Grupo Simec  Turning Point

Excellent diversification

The 3 months correlation between Grupo and Turning is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and Turning Point Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turning Point Brands 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 Turning Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turning Point Brands has no effect on the direction of Grupo Simec i.e., Grupo Simec and Turning Point go up and down completely randomly.

Pair Corralation between Grupo Simec and Turning Point

Considering the 90-day investment horizon Grupo Simec SAB is expected to under-perform the Turning Point. In addition to that, Grupo Simec is 1.25 times more volatile than Turning Point Brands. It trades about -0.01 of its total potential returns per unit of risk. Turning Point Brands is currently generating about 0.2 per unit of volatility. If you would invest  2,435  in Turning Point Brands on September 12, 2024 and sell it today you would earn a total of  3,918  from holding Turning Point Brands or generate 160.9% 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.  Turning Point Brands

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.

Turning Point Brands

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Turning Point Brands are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Turning Point sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Simec and Turning Point

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

The idea behind Grupo Simec SAB and Turning Point Brands 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.