Correlation Between So Martinho and Minerva SA
Can any of the company-specific risk be diversified away by investing in both So Martinho and Minerva SA 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 So Martinho and Minerva SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between So Martinho SA and Minerva SA, you can compare the effects of market volatilities on So Martinho and Minerva SA 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 So Martinho with a short position of Minerva SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of So Martinho and Minerva SA.
Diversification Opportunities for So Martinho and Minerva SA
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SMTO3 and Minerva is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding So Martinho SA and Minerva SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerva SA and So Martinho 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 So Martinho SA are associated (or correlated) with Minerva SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerva SA has no effect on the direction of So Martinho i.e., So Martinho and Minerva SA go up and down completely randomly.
Pair Corralation between So Martinho and Minerva SA
Assuming the 90 days trading horizon So Martinho SA is expected to generate 0.67 times more return on investment than Minerva SA. However, So Martinho SA is 1.49 times less risky than Minerva SA. It trades about -0.09 of its potential returns per unit of risk. Minerva SA is currently generating about -0.1 per unit of risk. If you would invest 2,699 in So Martinho SA on November 1, 2024 and sell it today you would lose (451.00) from holding So Martinho SA or give up 16.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
So Martinho SA vs. Minerva SA
Performance |
| Timeline |
| So Martinho SA |
| Minerva SA |
So Martinho and Minerva SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with So Martinho and Minerva SA
The main advantage of trading using opposite So Martinho and Minerva SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if So Martinho position performs unexpectedly, Minerva SA 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 Minerva SA will offset losses from the drop in Minerva SA's long position.| So Martinho vs. SLC Agrcola SA | So Martinho vs. Cosan SA | So Martinho vs. Minerva SA | So Martinho vs. Randon SA Implementos |
| Minerva SA vs. Marfrig Global Foods | Minerva SA vs. JBS SA | Minerva SA vs. BRF SA | Minerva SA vs. SLC Agrcola 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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