Correlation Between MAHLE Metal and Companhiade Eletricidade

Can any of the company-specific risk be diversified away by investing in both MAHLE Metal and Companhiade Eletricidade 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 Companhiade Eletricidade 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 Companhiade Eletricidade do, you can compare the effects of market volatilities on MAHLE Metal and Companhiade Eletricidade 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 Companhiade Eletricidade. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAHLE Metal and Companhiade Eletricidade.

Diversification Opportunities for MAHLE Metal and Companhiade Eletricidade

0.62

Correlation Coefficient

MAHLE Metal  Companhiade Eletricidade

Poor diversification

The 3 months correlation between MAHLE and Companhiade is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve and Companhiade Eletricidade do in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhiade Eletricidade 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 Companhiade Eletricidade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhiade Eletricidade has no effect on the direction of MAHLE Metal i.e., MAHLE Metal and Companhiade Eletricidade go up and down completely randomly.

Pair Corralation between MAHLE Metal and Companhiade Eletricidade

Assuming the 90 days trading horizon MAHLE Metal Leve is expected to under-perform the Companhiade Eletricidade. But the stock apears to be less risky and, when comparing its historical volatility, MAHLE Metal Leve is 1.36 times less risky than Companhiade Eletricidade. The stock trades about -0.13 of its potential returns per unit of risk. The Companhiade Eletricidade do is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,869  in Companhiade Eletricidade do on September 13, 2024 and sell it today you would lose (299.00) from holding Companhiade Eletricidade do or give up 7.73% of portfolio value over 90 days.

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

MAHLE Metal Leve  vs.  Companhiade Eletricidade do

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.

Companhiade Eletricidade

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhiade Eletricidade do has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Preferred 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.

Pair Trading with MAHLE Metal and Companhiade Eletricidade

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

The idea behind MAHLE Metal Leve and Companhiade Eletricidade do 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.