Correlation Between Marcopolo and Dhler SA

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

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

Diversification Opportunities for Marcopolo and Dhler SA

-0.48

Correlation Coefficient

Marcopolo  Dhler SA

Very good diversification

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

Pair Corralation between Marcopolo and Dhler SA

Assuming the 90 days trading horizon Marcopolo SA is expected to generate 1.86 times more return on investment than Dhler SA. However, Marcopolo is 1.86 times more volatile than Dhler SA. It trades about 0.0 of its potential returns per unit of risk. Dhler SA is currently generating about -0.05 per unit of risk. If you would invest  776.00  in Marcopolo SA on September 23, 2024 and sell it today you would lose (19.00) from holding Marcopolo SA or give up 2.45% of portfolio value over 90 days.

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

Marcopolo SA  vs.  Dhler SA

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.

Dhler SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Marcopolo SA and Dhler 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.