Correlation Between Multiexport Foods and Masisa
Can any of the company-specific risk be diversified away by investing in both Multiexport Foods and Masisa 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 Multiexport Foods and Masisa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multiexport Foods SA and Masisa, you can compare the effects of market volatilities on Multiexport Foods and Masisa 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 Multiexport Foods with a short position of Masisa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multiexport Foods and Masisa.
Diversification Opportunities for Multiexport Foods and Masisa
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Multiexport and Masisa is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Multiexport Foods SA and Masisa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masisa and Multiexport Foods 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 Multiexport Foods SA are associated (or correlated) with Masisa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masisa has no effect on the direction of Multiexport Foods i.e., Multiexport Foods and Masisa go up and down completely randomly.
Pair Corralation between Multiexport Foods and Masisa
Assuming the 90 days trading horizon Multiexport Foods SA is expected to generate 0.64 times more return on investment than Masisa. However, Multiexport Foods SA is 1.56 times less risky than Masisa. It trades about -0.05 of its potential returns per unit of risk. Masisa is currently generating about -0.04 per unit of risk. If you would invest 24,314 in Multiexport Foods SA on August 27, 2024 and sell it today you would lose (3,826) from holding Multiexport Foods SA or give up 15.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.69% |
| Values | Daily Returns |
Multiexport Foods SA vs. Masisa
Performance |
| Timeline |
| Multiexport Foods |
| Masisa |
Multiexport Foods and Masisa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multiexport Foods and Masisa
The main advantage of trading using opposite Multiexport Foods and Masisa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multiexport Foods position performs unexpectedly, Masisa 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 Masisa will offset losses from the drop in Masisa's long position.The idea behind Multiexport Foods SA and Masisa pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Masisa vs. Administradora Americana de | Masisa vs. Energia Latina SA | Masisa vs. Embotelladora Andina SA | Masisa vs. Salfacorp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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