Correlation Between Monteiro Aranha and HALI34

Can any of the company-specific risk be diversified away by investing in both Monteiro Aranha and HALI34 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 Monteiro Aranha and HALI34 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Monteiro Aranha SA and HALI34, you can compare the effects of market volatilities on Monteiro Aranha and HALI34 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 Monteiro Aranha with a short position of HALI34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monteiro Aranha and HALI34.

Diversification Opportunities for Monteiro Aranha and HALI34

0.54

Correlation Coefficient

Monteiro Aranha  HALI34

Very weak diversification

The 3 months correlation between Monteiro and HALI34 is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Monteiro Aranha SA and HALI34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HALI34 and Monteiro Aranha 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 Monteiro Aranha SA are associated (or correlated) with HALI34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HALI34 has no effect on the direction of Monteiro Aranha i.e., Monteiro Aranha and HALI34 go up and down completely randomly.

Pair Corralation between Monteiro Aranha and HALI34

Assuming the 90 days trading horizon Monteiro Aranha SA is expected to generate 0.27 times more return on investment than HALI34. However, Monteiro Aranha SA is 3.68 times less risky than HALI34. It trades about 0.06 of its potential returns per unit of risk. HALI34 is currently generating about 0.0 per unit of risk. If you would invest  39,787  in Monteiro Aranha SA on September 22, 2024 and sell it today you would earn a total of  1,313  from holding Monteiro Aranha SA or generate 3.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Monteiro Aranha SA  vs.  HALI34

Monteiro Aranha SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Monteiro Aranha SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Monteiro Aranha is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

HALI34

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HALI34 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, HALI34 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Monteiro Aranha and HALI34

The main advantage of trading using opposite Monteiro Aranha and HALI34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monteiro Aranha position performs unexpectedly, HALI34 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 HALI34 will offset losses from the drop in HALI34's long position.

The idea behind Monteiro Aranha SA and HALI34 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.