Correlation Between Recrusul and Minupar Participaes

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

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

Diversification Opportunities for Recrusul and Minupar Participaes

0.81

Correlation Coefficient

Recrusul  Minupar Participaes

Very poor diversification

The 3 months correlation between Recrusul and Minupar is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Recrusul SA and Minupar Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minupar Participaes and Recrusul 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 Recrusul SA are associated (or correlated) with Minupar Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minupar Participaes has no effect on the direction of Recrusul i.e., Recrusul and Minupar Participaes go up and down completely randomly.

Pair Corralation between Recrusul and Minupar Participaes

Assuming the 90 days trading horizon Recrusul SA is expected to generate 2.23 times more return on investment than Minupar Participaes. However, Recrusul is 2.23 times more volatile than Minupar Participaes SA. It trades about 0.12 of its potential returns per unit of risk. Minupar Participaes SA is currently generating about 0.16 per unit of risk. If you would invest  101.00  in Recrusul SA on September 13, 2024 and sell it today you would earn a total of  45.00  from holding Recrusul SA or generate 44.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Recrusul SA  vs.  Minupar Participaes SA

Recrusul SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Recrusul SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Recrusul unveiled solid returns over the last few months and may actually be approaching a breakup point.

Minupar Participaes

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Minupar Participaes SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Minupar Participaes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Recrusul and Minupar Participaes

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

The idea behind Recrusul SA and Minupar Participaes 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.