Correlation Between FLOW TRADERS and MercadoLibre
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS and MercadoLibre 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 FLOW TRADERS and MercadoLibre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and MercadoLibre, you can compare the effects of market volatilities on FLOW TRADERS and MercadoLibre 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 FLOW TRADERS with a short position of MercadoLibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and MercadoLibre.
Diversification Opportunities for FLOW TRADERS and MercadoLibre
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between FLOW and MercadoLibre is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD and MercadoLibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MercadoLibre and FLOW TRADERS 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 FLOW TRADERS LTD are associated (or correlated) with MercadoLibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MercadoLibre has no effect on the direction of FLOW TRADERS i.e., FLOW TRADERS and MercadoLibre go up and down completely randomly.
Pair Corralation between FLOW TRADERS and MercadoLibre
Assuming the 90 days horizon FLOW TRADERS LTD is expected to generate 0.41 times more return on investment than MercadoLibre. However, FLOW TRADERS LTD is 2.42 times less risky than MercadoLibre. It trades about 0.05 of its potential returns per unit of risk. MercadoLibre is currently generating about 0.0 per unit of risk. If you would invest 2,096 in FLOW TRADERS LTD on September 15, 2024 and sell it today you would earn a total of 22.00 from holding FLOW TRADERS LTD or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLOW TRADERS LTD vs. MercadoLibre
Performance |
| Timeline |
| FLOW TRADERS LTD |
| MercadoLibre |
FLOW TRADERS and MercadoLibre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLOW TRADERS and MercadoLibre
The main advantage of trading using opposite FLOW TRADERS and MercadoLibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS position performs unexpectedly, MercadoLibre 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 MercadoLibre will offset losses from the drop in MercadoLibre's long position.| FLOW TRADERS vs. Superior Plus Corp | FLOW TRADERS vs. SIVERS SEMICONDUCTORS AB | FLOW TRADERS vs. CHINA HUARONG ENERHD 50 | FLOW TRADERS vs. NORDIC HALIBUT AS |
| MercadoLibre vs. Superior Plus Corp | MercadoLibre vs. SIVERS SEMICONDUCTORS AB | MercadoLibre vs. NorAm Drilling AS | MercadoLibre vs. Norsk Hydro ASA |
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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