Correlation Between Bardella and METISA Metalrgica

Can any of the company-specific risk be diversified away by investing in both Bardella and METISA Metalrgica 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 Bardella and METISA Metalrgica into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bardella SA Indstrias and METISA Metalrgica Timboense, you can compare the effects of market volatilities on Bardella and METISA Metalrgica 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 Bardella with a short position of METISA Metalrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bardella and METISA Metalrgica.

Diversification Opportunities for Bardella and METISA Metalrgica

0.24

Correlation Coefficient

Bardella  METISA Metalrgica

Modest diversification

The 3 months correlation between Bardella and METISA is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bardella SA Indstrias and METISA Metalrgica Timboense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METISA Metalrgica and Bardella 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 Bardella SA Indstrias are associated (or correlated) with METISA Metalrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METISA Metalrgica has no effect on the direction of Bardella i.e., Bardella and METISA Metalrgica go up and down completely randomly.

Pair Corralation between Bardella and METISA Metalrgica

Assuming the 90 days trading horizon Bardella SA Indstrias is expected to generate 1.07 times more return on investment than METISA Metalrgica. However, Bardella is 1.07 times more volatile than METISA Metalrgica Timboense. It trades about -0.01 of its potential returns per unit of risk. METISA Metalrgica Timboense is currently generating about -0.03 per unit of risk. If you would invest  940.00  in Bardella SA Indstrias on September 23, 2024 and sell it today you would lose (40.00) from holding Bardella SA Indstrias or give up 4.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bardella SA Indstrias  vs.  METISA Metalrgica Timboense

Bardella SA Indstrias

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bardella SA Indstrias has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bardella is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

METISA Metalrgica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METISA Metalrgica Timboense has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, METISA Metalrgica is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bardella and METISA Metalrgica

The main advantage of trading using opposite Bardella and METISA Metalrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bardella position performs unexpectedly, METISA Metalrgica 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 METISA Metalrgica will offset losses from the drop in METISA Metalrgica's long position.

The idea behind Bardella SA Indstrias and METISA Metalrgica Timboense 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.