Correlation Between Suzano Papel and Mercer International

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

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

Diversification Opportunities for Suzano Papel and Mercer International

0.03

Correlation Coefficient

Suzano Papel  Mercer International

Significant diversification

The 3 months correlation between Suzano and Mercer is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Suzano Papel e and Mercer International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercer International and Suzano Papel 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 Suzano Papel e are associated (or correlated) with Mercer International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercer International has no effect on the direction of Suzano Papel i.e., Suzano Papel and Mercer International go up and down completely randomly.

Pair Corralation between Suzano Papel and Mercer International

Considering the 90-day investment horizon Suzano Papel is expected to generate 2.45 times less return on investment than Mercer International. But when comparing it to its historical volatility, Suzano Papel e is 2.01 times less risky than Mercer International. It trades about 0.05 of its potential returns per unit of risk. Mercer International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  553.00  in Mercer International on September 4, 2024 and sell it today you would earn a total of  53.00  from holding Mercer International or generate 9.58% return on investment over 90 days.

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

Suzano Papel e  vs.  Mercer International

Suzano Papel e

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Suzano Papel e are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Suzano Papel is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Mercer International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mercer International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Mercer International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Suzano Papel and Mercer International

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

The idea behind Suzano Papel e and Mercer International 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.