Correlation Between Sims Metal and GAMES OPERATORS

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

By analyzing existing cross correlation between Sims Metal Management and GAMES OPERATORS SA, you can compare the effects of market volatilities on Sims Metal and GAMES OPERATORS 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 Sims Metal with a short position of GAMES OPERATORS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and GAMES OPERATORS.

Diversification Opportunities for Sims Metal and GAMES OPERATORS

0.42

Correlation Coefficient

Sims Metal  GAMES OPERATORS

Very weak diversification

The 3 months correlation between Sims and GAMES is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and GAMES OPERATORS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMES OPERATORS SA and Sims Metal 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 Sims Metal Management are associated (or correlated) with GAMES OPERATORS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMES OPERATORS SA has no effect on the direction of Sims Metal i.e., Sims Metal and GAMES OPERATORS go up and down completely randomly.

Pair Corralation between Sims Metal and GAMES OPERATORS

Assuming the 90 days horizon Sims Metal Management is expected to generate 0.55 times more return on investment than GAMES OPERATORS. However, Sims Metal Management is 1.81 times less risky than GAMES OPERATORS. It trades about 0.23 of its potential returns per unit of risk. GAMES OPERATORS SA is currently generating about 0.04 per unit of risk. If you would invest  765.00  in Sims Metal Management on April 22, 2025 and sell it today you would earn a total of  155.00  from holding Sims Metal Management or generate 20.26% return on investment over 90 days.

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

Sims Metal Management  vs.  GAMES OPERATORS SA

Sims Metal Management

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sims Metal Management are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sims Metal reported solid returns over the last few months and may actually be approaching a breakup point.

GAMES OPERATORS SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GAMES OPERATORS SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, GAMES OPERATORS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sims Metal and GAMES OPERATORS

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

The idea behind Sims Metal Management and GAMES OPERATORS SA 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.