Correlation Between SIMON and Compania Cervecerias

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

By analyzing existing cross correlation between SIMON PROPERTY GROUP and Compania Cervecerias Unidas, you can compare the effects of market volatilities on SIMON and Compania Cervecerias 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 SIMON with a short position of Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMON and Compania Cervecerias.

Diversification Opportunities for SIMON and Compania Cervecerias

-0.35

Correlation Coefficient

SIMON  Compania Cervecerias

Very good diversification

The 3 months correlation between SIMON and Compania is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding SIMON PROPERTY GROUP and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias and SIMON 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 SIMON PROPERTY GROUP are associated (or correlated) with Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of SIMON i.e., SIMON and Compania Cervecerias go up and down completely randomly.

Pair Corralation between SIMON and Compania Cervecerias

Assuming the 90 days trading horizon SIMON PROPERTY GROUP is expected to generate 1.06 times more return on investment than Compania Cervecerias. However, SIMON is 1.06 times more volatile than Compania Cervecerias Unidas. It trades about 0.0 of its potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about -0.11 per unit of risk. If you would invest  9,313  in SIMON PROPERTY GROUP on May 21, 2025 and sell it today you would lose (107.00) from holding SIMON PROPERTY GROUP or give up 1.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

SIMON PROPERTY GROUP  vs.  Compania Cervecerias Unidas

SIMON PROPERTY GROUP

Risk-Adjusted Performance

Weakest

Over the last 90 days SIMON PROPERTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SIMON is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Compania Cervecerias

Risk-Adjusted Performance

Weakest

Over the last 90 days Compania Cervecerias Unidas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SIMON and Compania Cervecerias

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

The idea behind SIMON PROPERTY GROUP and Compania Cervecerias Unidas 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.