Correlation Between Grupo Simec and NESNVX

Can any of the company-specific risk be diversified away by investing in both Grupo Simec and NESNVX 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 NESNVX 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 NESNVX 4 24 SEP 48, you can compare the effects of market volatilities on Grupo Simec and NESNVX 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 NESNVX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Simec and NESNVX.

Diversification Opportunities for Grupo Simec and NESNVX

0.14

Correlation Coefficient

Grupo Simec  NESNVX

Average diversification

The 3 months correlation between Grupo and NESNVX is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and NESNVX 4 24 SEP 48 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESNVX 4 24 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 NESNVX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESNVX 4 24 has no effect on the direction of Grupo Simec i.e., Grupo Simec and NESNVX go up and down completely randomly.

Pair Corralation between Grupo Simec and NESNVX

Considering the 90-day investment horizon Grupo Simec is expected to generate 4.5 times less return on investment than NESNVX. In addition to that, Grupo Simec is 2.2 times more volatile than NESNVX 4 24 SEP 48. It trades about 0.01 of its total potential returns per unit of risk. NESNVX 4 24 SEP 48 is currently generating about 0.12 per unit of volatility. If you would invest  7,937  in NESNVX 4 24 SEP 48 on December 23, 2024 and sell it today you would earn a total of  772.00  from holding NESNVX 4 24 SEP 48 or generate 9.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	81.03%
Values	Daily Returns

Grupo Simec SAB  vs.  NESNVX 4 24 SEP 48

Grupo Simec SAB

Risk-Adjusted Performance

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.

NESNVX 4 24

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NESNVX 4 24 SEP 48 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, NESNVX sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Simec and NESNVX

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

The idea behind Grupo Simec SAB and NESNVX 4 24 SEP 48 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.