Correlation Between Sims Metal and BRAGG GAMING

Can any of the company-specific risk be diversified away by investing in both Sims Metal and BRAGG GAMING 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 BRAGG GAMING 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 BRAGG GAMING GRP, you can compare the effects of market volatilities on Sims Metal and BRAGG GAMING 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 BRAGG GAMING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and BRAGG GAMING.

Diversification Opportunities for Sims Metal and BRAGG GAMING

0.75

Correlation Coefficient

Sims Metal  BRAGG GAMING

Poor diversification

The 3 months correlation between Sims and BRAGG is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and BRAGG GAMING GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRAGG GAMING GRP 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 BRAGG GAMING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRAGG GAMING GRP has no effect on the direction of Sims Metal i.e., Sims Metal and BRAGG GAMING go up and down completely randomly.

Pair Corralation between Sims Metal and BRAGG GAMING

Assuming the 90 days horizon Sims Metal is expected to generate 1.28 times less return on investment than BRAGG GAMING. But when comparing it to its historical volatility, Sims Metal Management is 1.95 times less risky than BRAGG GAMING. It trades about 0.23 of its potential returns per unit of risk. BRAGG GAMING GRP is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  314.00  in BRAGG GAMING GRP on April 20, 2025 and sell it today you would earn a total of  78.00  from holding BRAGG GAMING GRP or generate 24.84% return on investment over 90 days.

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

Sims Metal Management  vs.  BRAGG GAMING GRP

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 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Sims Metal reported solid returns over the last few months and may actually be approaching a breakup point.

BRAGG GAMING GRP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BRAGG GAMING GRP are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BRAGG GAMING reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sims Metal and BRAGG GAMING

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

The idea behind Sims Metal Management and BRAGG GAMING GRP 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..