Correlation Between Grupo Simec and Zedge

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

Diversification Opportunities for Grupo Simec and Zedge

0.46

Correlation Coefficient

Grupo Simec  Zedge

Very weak diversification

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

Pair Corralation between Grupo Simec and Zedge

Considering the 90-day investment horizon Grupo Simec is expected to generate 11.45 times less return on investment than Zedge. But when comparing it to its historical volatility, Grupo Simec SAB is 1.59 times less risky than Zedge. It trades about 0.0 of its potential returns per unit of risk. Zedge Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  230.00  in Zedge Inc on October 13, 2024 and sell it today you would earn a total of  20.00  from holding Zedge Inc or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.31%
Values	Daily Returns

Grupo Simec SAB  vs.  Zedge 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.

Zedge Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zedge Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Grupo Simec and Zedge

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

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