Correlation Between Grupo Simec and Companhia Siderrgica

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

Diversification Opportunities for Grupo Simec and Companhia Siderrgica

-0.45

Correlation Coefficient

Grupo Simec  Companhia Siderrgica

Very good diversification

The 3 months correlation between Grupo and Companhia is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and Companhia Siderrgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderrgica 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 Companhia Siderrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderrgica has no effect on the direction of Grupo Simec i.e., Grupo Simec and Companhia Siderrgica go up and down completely randomly.

Pair Corralation between Grupo Simec and Companhia Siderrgica

Assuming the 90 days trading horizon Grupo Simec SAB is expected to generate 0.13 times more return on investment than Companhia Siderrgica. However, Grupo Simec SAB is 7.81 times less risky than Companhia Siderrgica. It trades about 0.14 of its potential returns per unit of risk. Companhia Siderrgica Nacional is currently generating about -0.32 per unit of risk. If you would invest  18,495  in Grupo Simec SAB on October 15, 2024 and sell it today you would earn a total of  305.00  from holding Grupo Simec SAB or generate 1.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Grupo Simec SAB  vs.  Companhia Siderrgica Nacional

Grupo Simec SAB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Simec SAB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Grupo Simec is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Companhia Siderrgica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia Siderrgica Nacional has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Grupo Simec and Companhia Siderrgica

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

The idea behind Grupo Simec SAB and Companhia Siderrgica Nacional 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.