Correlation Between Marisa Lojas and Guararapes Confeces

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

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

Diversification Opportunities for Marisa Lojas and Guararapes Confeces

0.72

Correlation Coefficient

Marisa Lojas  Guararapes Confeces

Poor diversification

The 3 months correlation between Marisa and Guararapes is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Marisa Lojas SA and Guararapes Confeces SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guararapes Confeces and Marisa Lojas 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 Marisa Lojas SA are associated (or correlated) with Guararapes Confeces. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guararapes Confeces has no effect on the direction of Marisa Lojas i.e., Marisa Lojas and Guararapes Confeces go up and down completely randomly.

Pair Corralation between Marisa Lojas and Guararapes Confeces

Assuming the 90 days trading horizon Marisa Lojas SA is expected to generate 0.89 times more return on investment than Guararapes Confeces. However, Marisa Lojas SA is 1.12 times less risky than Guararapes Confeces. It trades about 0.23 of its potential returns per unit of risk. Guararapes Confeces SA is currently generating about 0.06 per unit of risk. If you would invest  101.00  in Marisa Lojas SA on December 30, 2024 and sell it today you would earn a total of  60.00  from holding Marisa Lojas SA or generate 59.41% return on investment over 90 days.

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

Marisa Lojas SA  vs.  Guararapes Confeces SA

Marisa Lojas SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marisa Lojas SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Marisa Lojas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Guararapes Confeces

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guararapes Confeces SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Guararapes Confeces unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marisa Lojas and Guararapes Confeces

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

The idea behind Marisa Lojas SA and Guararapes Confeces 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.