Correlation Between GPS Participaes and Mliuz SA
Can any of the company-specific risk be diversified away by investing in both GPS Participaes and Mliuz 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 GPS Participaes and Mliuz SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GPS Participaes e and Mliuz SA, you can compare the effects of market volatilities on GPS Participaes and Mliuz 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 GPS Participaes with a short position of Mliuz SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GPS Participaes and Mliuz SA.
Diversification Opportunities for GPS Participaes and Mliuz SA
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GPS and Mliuz is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding GPS Participaes e and Mliuz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mliuz SA and GPS Participaes 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 GPS Participaes e are associated (or correlated) with Mliuz SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mliuz SA has no effect on the direction of GPS Participaes i.e., GPS Participaes and Mliuz SA go up and down completely randomly.
Pair Corralation between GPS Participaes and Mliuz SA
Assuming the 90 days trading horizon GPS Participaes e is expected to generate 0.63 times more return on investment than Mliuz SA. However, GPS Participaes e is 1.58 times less risky than Mliuz SA. It trades about -0.08 of its potential returns per unit of risk. Mliuz SA is currently generating about -0.09 per unit of risk. If you would invest 1,775 in GPS Participaes e on November 2, 2024 and sell it today you would lose (267.00) from holding GPS Participaes e or give up 15.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GPS Participaes e vs. Mliuz SA
Performance |
| Timeline |
| GPS Participaes e |
| Mliuz SA |
GPS Participaes and Mliuz SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GPS Participaes and Mliuz SA
The main advantage of trading using opposite GPS Participaes and Mliuz SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GPS Participaes position performs unexpectedly, Mliuz 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 Mliuz SA will offset losses from the drop in Mliuz SA's long position.| GPS Participaes vs. Taiwan Semiconductor Manufacturing | GPS Participaes vs. Apple Inc | GPS Participaes vs. Alibaba Group Holding | GPS Participaes vs. Microsoft |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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