Correlation Between Guararapes Confeces and Marisa Lojas
Can any of the company-specific risk be diversified away by investing in both Guararapes Confeces and Marisa Lojas 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 Guararapes Confeces and Marisa Lojas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guararapes Confeces SA and Marisa Lojas SA, you can compare the effects of market volatilities on Guararapes Confeces and Marisa Lojas 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 Guararapes Confeces with a short position of Marisa Lojas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guararapes Confeces and Marisa Lojas.
Diversification Opportunities for Guararapes Confeces and Marisa Lojas
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Guararapes and Marisa is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Guararapes Confeces SA and Marisa Lojas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marisa Lojas SA and Guararapes Confeces 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 Guararapes Confeces SA are associated (or correlated) with Marisa Lojas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marisa Lojas SA has no effect on the direction of Guararapes Confeces i.e., Guararapes Confeces and Marisa Lojas go up and down completely randomly.
Pair Corralation between Guararapes Confeces and Marisa Lojas
Assuming the 90 days trading horizon Guararapes Confeces SA is expected to under-perform the Marisa Lojas. In addition to that, Guararapes Confeces is 1.38 times more volatile than Marisa Lojas SA. It trades about -0.07 of its total potential returns per unit of risk. Marisa Lojas SA is currently generating about -0.1 per unit of volatility. If you would invest 114.00 in Marisa Lojas SA on September 2, 2024 and sell it today you would lose (21.00) from holding Marisa Lojas SA or give up 18.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guararapes Confeces SA vs. Marisa Lojas SA
Performance |
| Timeline |
| Guararapes Confeces |
| Marisa Lojas SA |
Guararapes Confeces and Marisa Lojas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guararapes Confeces and Marisa Lojas
The main advantage of trading using opposite Guararapes Confeces and Marisa Lojas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guararapes Confeces position performs unexpectedly, Marisa Lojas 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 Marisa Lojas will offset losses from the drop in Marisa Lojas' long position.| Guararapes Confeces vs. Lojas Renner SA | Guararapes Confeces vs. Marisa Lojas SA | Guararapes Confeces vs. Vulcabras Azaleia SA | Guararapes Confeces vs. Alpargatas SA |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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