Correlation Between METISA Metalrgica and GP Investments
Can any of the company-specific risk be diversified away by investing in both METISA Metalrgica and GP Investments 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 METISA Metalrgica and GP Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METISA Metalrgica Timboense and GP Investments, you can compare the effects of market volatilities on METISA Metalrgica and GP Investments 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 METISA Metalrgica with a short position of GP Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of METISA Metalrgica and GP Investments.
Diversification Opportunities for METISA Metalrgica and GP Investments
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between METISA and GPIV33 is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and GP Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP Investments and METISA Metalrgica 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 METISA Metalrgica Timboense are associated (or correlated) with GP Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Investments has no effect on the direction of METISA Metalrgica i.e., METISA Metalrgica and GP Investments go up and down completely randomly.
Pair Corralation between METISA Metalrgica and GP Investments
Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to under-perform the GP Investments. But the preferred stock apears to be less risky and, when comparing its historical volatility, METISA Metalrgica Timboense is 1.24 times less risky than GP Investments. The preferred stock trades about -0.02 of its potential returns per unit of risk. The GP Investments is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 380.00 in GP Investments on August 30, 2024 and sell it today you would earn a total of 13.00 from holding GP Investments or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
METISA Metalrgica Timboense vs. GP Investments
Performance |
| Timeline |
| METISA Metalrgica |
| GP Investments |
METISA Metalrgica and GP Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METISA Metalrgica and GP Investments
The main advantage of trading using opposite METISA Metalrgica and GP Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METISA Metalrgica position performs unexpectedly, GP Investments 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 GP Investments will offset losses from the drop in GP Investments' long position.| METISA Metalrgica vs. Schulz SA | METISA Metalrgica vs. Springs Global Participaes | METISA Metalrgica vs. Indstrias Romi 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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