Correlation Between METISA Metalrgica and Bardella

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

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

Diversification Opportunities for METISA Metalrgica and Bardella

0.24

Correlation Coefficient

METISA Metalrgica  Bardella

Modest diversification

The 3 months correlation between METISA and Bardella is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and Bardella SA Indstrias in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bardella SA Indstrias and METISA Metalrgica 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 METISA Metalrgica Timboense are associated (or correlated) with Bardella. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bardella SA Indstrias has no effect on the direction of METISA Metalrgica i.e., METISA Metalrgica and Bardella go up and down completely randomly.

Pair Corralation between METISA Metalrgica and Bardella

Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to under-perform the Bardella. But the preferred stock apears to be less risky and, when comparing its historical volatility, METISA Metalrgica Timboense is 1.07 times less risky than Bardella. The preferred stock trades about -0.02 of its potential returns per unit of risk. The Bardella SA Indstrias is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  940.00  in Bardella SA Indstrias on September 24, 2024 and sell it today you would lose (40.00) from holding Bardella SA Indstrias or give up 4.26% of portfolio value over 90 days.

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

METISA Metalrgica Timboense  vs.  Bardella SA Indstrias

METISA Metalrgica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METISA Metalrgica Timboense has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, METISA Metalrgica is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Bardella SA Indstrias

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bardella SA Indstrias has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bardella is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with METISA Metalrgica and Bardella

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

The idea behind METISA Metalrgica Timboense and Bardella SA Indstrias 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.