Correlation Between Manufatura and Inepar SA
Can any of the company-specific risk be diversified away by investing in both Manufatura and Inepar SA 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 Manufatura and Inepar SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manufatura de Brinquedos and Inepar SA Indstria, you can compare the effects of market volatilities on Manufatura and Inepar SA 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 Manufatura with a short position of Inepar SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manufatura and Inepar SA.
Diversification Opportunities for Manufatura and Inepar SA
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Manufatura and Inepar is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Manufatura de Brinquedos and Inepar SA Indstria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inepar SA Indstria and Manufatura 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 Manufatura de Brinquedos are associated (or correlated) with Inepar SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inepar SA Indstria has no effect on the direction of Manufatura i.e., Manufatura and Inepar SA go up and down completely randomly.
Pair Corralation between Manufatura and Inepar SA
Assuming the 90 days trading horizon Manufatura de Brinquedos is expected to generate 1.0 times more return on investment than Inepar SA. However, Manufatura is 1.0 times more volatile than Inepar SA Indstria. It trades about -0.17 of its potential returns per unit of risk. Inepar SA Indstria is currently generating about -0.5 per unit of risk. If you would invest 374.00 in Manufatura de Brinquedos on August 27, 2024 and sell it today you would lose (34.00) from holding Manufatura de Brinquedos or give up 9.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Manufatura de Brinquedos vs. Inepar SA Indstria
Performance |
| Timeline |
| Manufatura de Brinquedos |
| Inepar SA Indstria |
Manufatura and Inepar SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manufatura and Inepar SA
The main advantage of trading using opposite Manufatura and Inepar SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manufatura position performs unexpectedly, Inepar SA 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 Inepar SA will offset losses from the drop in Inepar SA's long position.| Manufatura vs. Inepar SA Indstria | Manufatura vs. Bombril SA | Manufatura vs. Hotis Othon SA | Manufatura vs. Hrcules SA |
| Inepar SA vs. Lupatech SA | Inepar SA vs. Inepar SA Indstria | Inepar SA vs. Eternit SA | Inepar SA vs. Bombril SA |
Check out your portfolio center.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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