Correlation Between Turning Point and Grupo Simec

Can any of the company-specific risk be diversified away by investing in both Turning Point and Grupo Simec 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 Turning Point and Grupo Simec into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Turning Point Brands and Grupo Simec SAB, you can compare the effects of market volatilities on Turning Point and Grupo Simec 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 Turning Point with a short position of Grupo Simec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turning Point and Grupo Simec.

Diversification Opportunities for Turning Point and Grupo Simec

-0.58

Correlation Coefficient

Turning Point  Grupo Simec

Excellent diversification

The 3 months correlation between Turning and Grupo is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and Grupo Simec SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Simec SAB and Turning Point 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 Turning Point Brands are associated (or correlated) with Grupo Simec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Simec SAB has no effect on the direction of Turning Point i.e., Turning Point and Grupo Simec go up and down completely randomly.

Pair Corralation between Turning Point and Grupo Simec

Considering the 90-day investment horizon Turning Point Brands is expected to generate 0.8 times more return on investment than Grupo Simec. However, Turning Point Brands is 1.25 times less risky than Grupo Simec. It trades about 0.2 of its potential returns per unit of risk. Grupo Simec SAB is currently generating about -0.01 per unit of risk. If you would invest  2,435  in Turning Point Brands on September 12, 2024 and sell it today you would earn a total of  3,918  from holding Turning Point Brands or generate 160.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	79.84%
Values	Daily Returns

Turning Point Brands  vs.  Grupo Simec SAB

Turning Point Brands

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Turning Point Brands are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Turning Point sustained solid returns over the last few months and may actually be approaching a breakup point.

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

Pair Trading with Turning Point and Grupo Simec

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

The idea behind Turning Point Brands and Grupo Simec SAB 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.