Correlation Between Grupo Simec and KINDER

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

Diversification Opportunities for Grupo Simec and KINDER

0.18

Correlation Coefficient

Grupo Simec  KINDER

Average diversification

The 3 months correlation between Grupo and KINDER is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and KINDER MORGAN INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN INC 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 KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN INC has no effect on the direction of Grupo Simec i.e., Grupo Simec and KINDER go up and down completely randomly.

Pair Corralation between Grupo Simec and KINDER

Considering the 90-day investment horizon Grupo Simec SAB is expected to under-perform the KINDER. In addition to that, Grupo Simec is 9.04 times more volatile than KINDER MORGAN INC. It trades about -0.02 of its total potential returns per unit of risk. KINDER MORGAN INC is currently generating about -0.1 per unit of volatility. If you would invest  9,951  in KINDER MORGAN INC on October 26, 2024 and sell it today you would lose (143.00) from holding KINDER MORGAN INC or give up 1.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Grupo Simec SAB  vs.  KINDER MORGAN INC

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.

KINDER MORGAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KINDER MORGAN INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KINDER 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 KINDER

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

The idea behind Grupo Simec SAB and KINDER MORGAN INC 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.