Correlation Between MAHLE Metal and Nordon Indstrias
Can any of the company-specific risk be diversified away by investing in both MAHLE Metal and Nordon Indstrias 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 MAHLE Metal and Nordon Indstrias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAHLE Metal Leve and Nordon Indstrias Metalrgicas, you can compare the effects of market volatilities on MAHLE Metal and Nordon Indstrias 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 MAHLE Metal with a short position of Nordon Indstrias. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAHLE Metal and Nordon Indstrias.
Diversification Opportunities for MAHLE Metal and Nordon Indstrias
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MAHLE and Nordon is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve and Nordon Indstrias Metalrgicas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordon Indstrias Met and MAHLE 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 MAHLE Metal Leve are associated (or correlated) with Nordon Indstrias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordon Indstrias Met has no effect on the direction of MAHLE Metal i.e., MAHLE Metal and Nordon Indstrias go up and down completely randomly.
Pair Corralation between MAHLE Metal and Nordon Indstrias
Assuming the 90 days trading horizon MAHLE Metal is expected to generate 4.23 times less return on investment than Nordon Indstrias. But when comparing it to its historical volatility, MAHLE Metal Leve is 3.24 times less risky than Nordon Indstrias. It trades about 0.04 of its potential returns per unit of risk. Nordon Indstrias Metalrgicas is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 400.00 in Nordon Indstrias Metalrgicas on September 12, 2024 and sell it today you would earn a total of 230.00 from holding Nordon Indstrias Metalrgicas or generate 57.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
MAHLE Metal Leve vs. Nordon Indstrias Metalrgicas
Performance |
| Timeline |
| MAHLE Metal Leve |
| Nordon Indstrias Met |
MAHLE Metal and Nordon Indstrias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAHLE Metal and Nordon Indstrias
The main advantage of trading using opposite MAHLE Metal and Nordon Indstrias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAHLE Metal position performs unexpectedly, Nordon Indstrias 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 Nordon Indstrias will offset losses from the drop in Nordon Indstrias' long position.| MAHLE Metal vs. Tupy SA | MAHLE Metal vs. Engie Brasil Energia | MAHLE Metal vs. Grendene SA | MAHLE Metal vs. M Dias Branco |
| Nordon Indstrias vs. Lupatech SA | Nordon Indstrias vs. Recrusul SA | Nordon Indstrias vs. Fundo Investimento Imobiliario | Nordon Indstrias vs. LESTE FDO INV |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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