Correlation Between MAHLE Metal and CM Hospitalar

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

Diversification Opportunities for MAHLE Metal and CM Hospitalar

0.05

Correlation Coefficient

MAHLE Metal  CM Hospitalar

Significant diversification

The 3 months correlation between MAHLE and VVEO3 is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve and CM Hospitalar SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CM Hospitalar SA 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 CM Hospitalar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CM Hospitalar SA has no effect on the direction of MAHLE Metal i.e., MAHLE Metal and CM Hospitalar go up and down completely randomly.

Pair Corralation between MAHLE Metal and CM Hospitalar

Assuming the 90 days trading horizon MAHLE Metal Leve is expected to under-perform the CM Hospitalar. But the stock apears to be less risky and, when comparing its historical volatility, MAHLE Metal Leve is 4.01 times less risky than CM Hospitalar. The stock trades about -0.18 of its potential returns per unit of risk. The CM Hospitalar SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  190.00  in CM Hospitalar SA on August 30, 2024 and sell it today you would earn a total of  14.00  from holding CM Hospitalar SA or generate 7.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

MAHLE Metal Leve  vs.  CM Hospitalar SA

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CM Hospitalar SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CM Hospitalar SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, CM Hospitalar unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MAHLE Metal and CM Hospitalar

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

The idea behind MAHLE Metal Leve and CM Hospitalar SA 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 Stocks Directory module to find actively traded stocks across global markets.