Correlation Between Strauss and Neto Malinda

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

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

Diversification Opportunities for Strauss and Neto Malinda

0.95

Correlation Coefficient

Strauss  Neto Malinda

Almost no diversification

The 3 months correlation between Strauss and Neto is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Strauss Group and Neto Malinda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neto Malinda and Strauss 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 Strauss Group are associated (or correlated) with Neto Malinda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neto Malinda has no effect on the direction of Strauss i.e., Strauss and Neto Malinda go up and down completely randomly.

Pair Corralation between Strauss and Neto Malinda

Assuming the 90 days trading horizon Strauss Group is expected to under-perform the Neto Malinda. But the stock apears to be less risky and, when comparing its historical volatility, Strauss Group is 1.42 times less risky than Neto Malinda. The stock trades about -0.02 of its potential returns per unit of risk. The Neto Malinda is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  872,748  in Neto Malinda on September 28, 2024 and sell it today you would lose (70,248) from holding Neto Malinda or give up 8.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.74%
Values	Daily Returns

Strauss Group  vs.  Neto Malinda

Strauss Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Strauss Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Strauss sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Strauss and Neto Malinda

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

The idea behind Strauss Group and Neto Malinda 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.