Correlation Between Recrusul and Marcopolo

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

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

Diversification Opportunities for Recrusul and Marcopolo

0.75

Correlation Coefficient

Recrusul  Marcopolo

Poor diversification

The 3 months correlation between Recrusul and Marcopolo is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Recrusul SA and Marcopolo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcopolo SA 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 Marcopolo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcopolo SA has no effect on the direction of Recrusul i.e., Recrusul and Marcopolo go up and down completely randomly.

Pair Corralation between Recrusul and Marcopolo

Assuming the 90 days trading horizon Recrusul SA is expected to under-perform the Marcopolo. In addition to that, Recrusul is 2.34 times more volatile than Marcopolo SA. It trades about -0.21 of its total potential returns per unit of risk. Marcopolo SA is currently generating about -0.34 per unit of volatility. If you would invest  942.00  in Marcopolo SA on September 23, 2024 and sell it today you would lose (185.00) from holding Marcopolo SA or give up 19.64% of portfolio value over 90 days.

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

Recrusul SA  vs.  Marcopolo SA

Recrusul SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Recrusul SA are ranked lower than 7 (%) 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.

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.

Pair Trading with Recrusul and Marcopolo

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

The idea behind Recrusul SA and Marcopolo 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.