Correlation Between MRV Engenharia and Rumo SA

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

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

Diversification Opportunities for MRV Engenharia and Rumo SA

0.35

Correlation Coefficient

MRV Engenharia  Rumo SA

Weak diversification

The 3 months correlation between MRV and Rumo is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding MRV Engenharia e and Rumo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rumo SA and MRV Engenharia 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 MRV Engenharia e are associated (or correlated) with Rumo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rumo SA has no effect on the direction of MRV Engenharia i.e., MRV Engenharia and Rumo SA go up and down completely randomly.

Pair Corralation between MRV Engenharia and Rumo SA

Assuming the 90 days trading horizon MRV Engenharia e is expected to under-perform the Rumo SA. In addition to that, MRV Engenharia is 2.01 times more volatile than Rumo SA. It trades about -0.16 of its total potential returns per unit of risk. Rumo SA is currently generating about -0.13 per unit of volatility. If you would invest  2,167  in Rumo SA on September 4, 2024 and sell it today you would lose (281.00) from holding Rumo SA or give up 12.97% of portfolio value over 90 days.

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

MRV Engenharia e  vs.  Rumo SA

MRV Engenharia e

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MRV Engenharia e 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.

Rumo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rumo SA 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 MRV Engenharia and Rumo SA

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

The idea behind MRV Engenharia e and Rumo 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.