Correlation Between MAHLE Metal and Afluente Transmisso

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

By analyzing existing cross correlation between MAHLE Metal Leve and Afluente Transmisso de, you can compare the effects of market volatilities on MAHLE Metal and Afluente Transmisso 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 MAHLE Metal with a short position of Afluente Transmisso. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAHLE Metal and Afluente Transmisso.

Diversification Opportunities for MAHLE Metal and Afluente Transmisso

0.32

Correlation Coefficient

MAHLE Metal  Afluente Transmisso

Weak diversification

The 3 months correlation between MAHLE and Afluente is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve and Afluente Transmisso de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afluente Transmisso and MAHLE Metal 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 MAHLE Metal Leve are associated (or correlated) with Afluente Transmisso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afluente Transmisso has no effect on the direction of MAHLE Metal i.e., MAHLE Metal and Afluente Transmisso go up and down completely randomly.

Pair Corralation between MAHLE Metal and Afluente Transmisso

Assuming the 90 days trading horizon MAHLE Metal Leve is expected to under-perform the Afluente Transmisso. But the stock apears to be less risky and, when comparing its historical volatility, MAHLE Metal Leve is 1.02 times less risky than Afluente Transmisso. The stock trades about -0.12 of its potential returns per unit of risk. The Afluente Transmisso de is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  723.00  in Afluente Transmisso de on September 16, 2024 and sell it today you would lose (23.00) from holding Afluente Transmisso de or give up 3.18% of portfolio value over 90 days.

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

MAHLE Metal Leve  vs.  Afluente Transmisso de

MAHLE Metal Leve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAHLE Metal Leve has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Afluente Transmisso

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with MAHLE Metal and Afluente Transmisso

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

The idea behind MAHLE Metal Leve and Afluente Transmisso de 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.