Correlation Between MercadoLibre and Mliuz SA
Can any of the company-specific risk be diversified away by investing in both MercadoLibre 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 MercadoLibre and Mliuz SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MercadoLibre and Mliuz SA, you can compare the effects of market volatilities on MercadoLibre 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 MercadoLibre with a short position of Mliuz SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of MercadoLibre and Mliuz SA.
Diversification Opportunities for MercadoLibre and Mliuz SA
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between MercadoLibre and Mliuz is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding MercadoLibre and Mliuz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mliuz SA and MercadoLibre 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 MercadoLibre 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 MercadoLibre i.e., MercadoLibre and Mliuz SA go up and down completely randomly.
Pair Corralation between MercadoLibre and Mliuz SA
Assuming the 90 days trading horizon MercadoLibre is expected to generate 1.58 times less return on investment than Mliuz SA. But when comparing it to its historical volatility, MercadoLibre is 4.12 times less risky than Mliuz SA. It trades about 0.1 of its potential returns per unit of risk. Mliuz SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 319.00 in Mliuz SA on September 12, 2024 and sell it today you would lose (4.00) from holding Mliuz SA or give up 1.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
MercadoLibre vs. Mliuz SA
Performance |
| Timeline |
| MercadoLibre |
| Mliuz SA |
MercadoLibre and Mliuz SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MercadoLibre and Mliuz SA
The main advantage of trading using opposite MercadoLibre and Mliuz SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MercadoLibre 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.| MercadoLibre vs. Mliuz SA | MercadoLibre vs. Natura Co Holding | MercadoLibre vs. Rede DOr So | MercadoLibre vs. Locaweb Servios de |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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