Correlation Between Neto Malinda and Shufersal

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

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

Diversification Opportunities for Neto Malinda and Shufersal

0.96

Correlation Coefficient

Neto Malinda  Shufersal

Almost no diversification

The 3 months correlation between Neto and Shufersal is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Neto Malinda and Shufersal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shufersal and Neto Malinda 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 Neto Malinda are associated (or correlated) with Shufersal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shufersal has no effect on the direction of Neto Malinda i.e., Neto Malinda and Shufersal go up and down completely randomly.

Pair Corralation between Neto Malinda and Shufersal

Assuming the 90 days trading horizon Neto Malinda is expected to generate 1.48 times more return on investment than Shufersal. However, Neto Malinda is 1.48 times more volatile than Shufersal. It trades about 0.13 of its potential returns per unit of risk. Shufersal is currently generating about 0.18 per unit of risk. If you would invest  762,588  in Neto Malinda on September 27, 2024 and sell it today you would earn a total of  39,912  from holding Neto Malinda or generate 5.23% return on investment over 90 days.

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

Neto Malinda  vs.  Shufersal

Neto Malinda

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Neto Malinda are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Neto Malinda sustained solid returns over the last few months and may actually be approaching a breakup point.

Shufersal

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shufersal are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Shufersal sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neto Malinda and Shufersal

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

The idea behind Neto Malinda and Shufersal 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.