Correlation Between Mundial SA and Refinaria

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

By analyzing existing cross correlation between Mundial SA and Refinaria de Petrleos, you can compare the effects of market volatilities on Mundial SA and Refinaria 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 Mundial SA with a short position of Refinaria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mundial SA and Refinaria.

Diversification Opportunities for Mundial SA and Refinaria

-0.48

Correlation Coefficient

Mundial SA  Refinaria

Very good diversification

The 3 months correlation between Mundial and Refinaria is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Mundial SA and Refinaria de Petrleos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Refinaria de Petrleos and Mundial SA 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 Mundial SA are associated (or correlated) with Refinaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Refinaria de Petrleos has no effect on the direction of Mundial SA i.e., Mundial SA and Refinaria go up and down completely randomly.

Pair Corralation between Mundial SA and Refinaria

Assuming the 90 days trading horizon Mundial SA is expected to generate 0.82 times more return on investment than Refinaria. However, Mundial SA is 1.22 times less risky than Refinaria. It trades about 0.09 of its potential returns per unit of risk. Refinaria de Petrleos is currently generating about -0.08 per unit of risk. If you would invest  1,550  in Mundial SA on September 5, 2024 and sell it today you would earn a total of  180.00  from holding Mundial SA or generate 11.61% return on investment over 90 days.

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

Mundial SA   vs.  Refinaria de Petrleos

Mundial SA

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mundial SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mundial SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Refinaria de Petrleos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Refinaria de Petrleos 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Mundial SA and Refinaria

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

The idea behind Mundial SA and Refinaria de Petrleos 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.