Correlation Between Grupo Simec and BLACK

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

Diversification Opportunities for Grupo Simec and BLACK

0.33

Correlation Coefficient

Grupo Simec  BLACK

Weak diversification

The 3 months correlation between Grupo and BLACK is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and BLACK HILLS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLACK HILLS P 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 BLACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLACK HILLS P has no effect on the direction of Grupo Simec i.e., Grupo Simec and BLACK go up and down completely randomly.

Pair Corralation between Grupo Simec and BLACK

Considering the 90-day investment horizon Grupo Simec SAB is expected to generate 1.93 times more return on investment than BLACK. However, Grupo Simec is 1.93 times more volatile than BLACK HILLS P. It trades about 0.05 of its potential returns per unit of risk. BLACK HILLS P is currently generating about -0.13 per unit of risk. If you would invest  2,622  in Grupo Simec SAB on October 8, 2024 and sell it today you would earn a total of  37.00  from holding Grupo Simec SAB or generate 1.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	83.33%
Values	Daily Returns

Grupo Simec SAB  vs.  BLACK HILLS P

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

BLACK HILLS P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BLACK HILLS P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BLACK is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grupo Simec and BLACK

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

The idea behind Grupo Simec SAB and BLACK HILLS P 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.