Correlation Between Grupo Simec and GAMCO Global

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

Diversification Opportunities for Grupo Simec and GAMCO Global

0.63

Correlation Coefficient

Grupo Simec  GAMCO Global

Poor diversification

The 3 months correlation between Grupo and GAMCO is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Simec SAB and GAMCO Global Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMCO Global Gold 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 GAMCO Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMCO Global Gold has no effect on the direction of Grupo Simec i.e., Grupo Simec and GAMCO Global go up and down completely randomly.

Pair Corralation between Grupo Simec and GAMCO Global

Considering the 90-day investment horizon Grupo Simec is expected to generate 3.29 times less return on investment than GAMCO Global. In addition to that, Grupo Simec is 1.95 times more volatile than GAMCO Global Gold. It trades about 0.0 of its total potential returns per unit of risk. GAMCO Global Gold is currently generating about 0.01 per unit of volatility. If you would invest  2,000  in GAMCO Global Gold on September 19, 2024 and sell it today you would earn a total of  58.00  from holding GAMCO Global Gold or generate 2.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.4%
Values	Daily Returns

Grupo Simec SAB  vs.  GAMCO Global Gold

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.

GAMCO Global Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMCO Global Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Grupo Simec and GAMCO Global

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

The idea behind Grupo Simec SAB and GAMCO Global Gold 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.