Correlation Between METISA Metalrgica and Lupatech
Can any of the company-specific risk be diversified away by investing in both METISA Metalrgica and Lupatech 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 Lupatech 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 Lupatech SA, you can compare the effects of market volatilities on METISA Metalrgica and Lupatech 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 Lupatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of METISA Metalrgica and Lupatech.
Diversification Opportunities for METISA Metalrgica and Lupatech
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between METISA and Lupatech is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and Lupatech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupatech SA 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 Lupatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupatech SA has no effect on the direction of METISA Metalrgica i.e., METISA Metalrgica and Lupatech go up and down completely randomly.
Pair Corralation between METISA Metalrgica and Lupatech
Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to generate 0.67 times more return on investment than Lupatech. However, METISA Metalrgica Timboense is 1.49 times less risky than Lupatech. It trades about 0.01 of its potential returns per unit of risk. Lupatech SA is currently generating about -0.03 per unit of risk. If you would invest 3,809 in METISA Metalrgica Timboense on August 30, 2024 and sell it today you would lose (210.00) from holding METISA Metalrgica Timboense or give up 5.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
METISA Metalrgica Timboense vs. Lupatech SA
Performance |
| Timeline |
| METISA Metalrgica |
| Lupatech SA |
METISA Metalrgica and Lupatech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METISA Metalrgica and Lupatech
The main advantage of trading using opposite METISA Metalrgica and Lupatech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METISA Metalrgica position performs unexpectedly, Lupatech 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 Lupatech will offset losses from the drop in Lupatech's long position.| METISA Metalrgica vs. Schulz SA | METISA Metalrgica vs. Fras le SA | METISA Metalrgica vs. PBG SA | METISA Metalrgica vs. Springs Global Participaes |
| Lupatech vs. PDG Realty SA | Lupatech vs. Positivo Tecnologia SA | Lupatech vs. Rossi Residencial SA | Lupatech vs. Eternit 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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