Correlation Between Marcopolo and Companhia

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

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

Diversification Opportunities for Marcopolo and Companhia

0.48

Correlation Coefficient

Marcopolo  Companhia

Very weak diversification

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

Pair Corralation between Marcopolo and Companhia

Assuming the 90 days trading horizon Marcopolo SA is expected to under-perform the Companhia. In addition to that, Marcopolo is 1.29 times more volatile than Companhia de Gs. It trades about 0.0 of its total potential returns per unit of risk. Companhia de Gs is currently generating about 0.01 per unit of volatility. If you would invest  12,551  in Companhia de Gs on September 23, 2024 and sell it today you would earn a total of  36.00  from holding Companhia de Gs or generate 0.29% return on investment over 90 days.

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

Marcopolo SA  vs.  Companhia de Gs

Marcopolo SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Companhia de Gs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia de Gs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Companhia 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 Marcopolo and Companhia

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

The idea behind Marcopolo SA and Companhia de Gs 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.