Correlation Between Ziff Davis and Grupo Simec

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

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

Diversification Opportunities for Ziff Davis and Grupo Simec

-0.52

Correlation Coefficient

Ziff Davis  Grupo Simec

Excellent diversification

The 3 months correlation between Ziff and Grupo is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Ziff Davis 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 Ziff Davis 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 Ziff Davis 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 Ziff Davis i.e., Ziff Davis and Grupo Simec go up and down completely randomly.

Pair Corralation between Ziff Davis and Grupo Simec

Allowing for the 90-day total investment horizon Ziff Davis is expected to under-perform the Grupo Simec. But the stock apears to be less risky and, when comparing its historical volatility, Ziff Davis is 1.62 times less risky than Grupo Simec. The stock trades about -0.02 of its potential returns per unit of risk. The Grupo Simec SAB is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,380  in Grupo Simec SAB on September 19, 2024 and sell it today you would lose (691.00) from holding Grupo Simec SAB or give up 20.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.51%
Values	Daily Returns

Ziff Davis  vs.  Grupo Simec SAB

Ziff Davis

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ziff Davis are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Ziff Davis may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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

Pair Trading with Ziff Davis and Grupo Simec

The main advantage of trading using opposite Ziff Davis and Grupo Simec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ziff Davis 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 Ziff Davis 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.