Correlation Between METISA Metalrgica and Basic Materials
Can any of the company-specific risk be diversified away by investing in both METISA Metalrgica and Basic Materials 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 Basic Materials 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 Basic Materials, you can compare the effects of market volatilities on METISA Metalrgica and Basic Materials 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 Basic Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of METISA Metalrgica and Basic Materials.
Diversification Opportunities for METISA Metalrgica and Basic Materials
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between METISA and Basic is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and Basic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Materials 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 Basic Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Materials has no effect on the direction of METISA Metalrgica i.e., METISA Metalrgica and Basic Materials go up and down completely randomly.
Pair Corralation between METISA Metalrgica and Basic Materials
Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to generate 2.66 times more return on investment than Basic Materials. However, METISA Metalrgica is 2.66 times more volatile than Basic Materials. It trades about 0.01 of its potential returns per unit of risk. Basic Materials is currently generating about 0.0 per unit of risk. If you would invest 3,595 in METISA Metalrgica Timboense on August 29, 2024 and sell it today you would earn a total of 4.00 from holding METISA Metalrgica Timboense or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
METISA Metalrgica Timboense vs. Basic Materials
Performance |
| Timeline |
METISA Metalrgica and Basic Materials Volatility Contrast
Predicted Return Density |
| Returns |
METISA Metalrgica Timboense
Pair trading matchups for METISA Metalrgica
Basic Materials
Pair trading matchups for Basic Materials
Pair Trading with METISA Metalrgica and Basic Materials
The main advantage of trading using opposite METISA Metalrgica and Basic Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METISA Metalrgica position performs unexpectedly, Basic Materials 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 Basic Materials will offset losses from the drop in Basic Materials' long position.| METISA Metalrgica vs. Recrusul SA | METISA Metalrgica vs. Randon SA Implementos | METISA Metalrgica vs. Electro Ao Altona |
| Basic Materials vs. CM Hospitalar SA | Basic Materials vs. Metalurgica Gerdau SA | Basic Materials vs. Broadcom | Basic Materials vs. Multilaser Industrial SA |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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