Correlation Between Cia Brasileira and Multilaser Industrial

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

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

Diversification Opportunities for Cia Brasileira and Multilaser Industrial

0.6

Correlation Coefficient

Cia Brasileira  Multilaser Industrial

Poor diversification

The 3 months correlation between Cia and Multilaser is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cia Brasileira de and Multilaser Industrial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multilaser Industrial and Cia Brasileira 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 Cia Brasileira de are associated (or correlated) with Multilaser Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multilaser Industrial has no effect on the direction of Cia Brasileira i.e., Cia Brasileira and Multilaser Industrial go up and down completely randomly.

Pair Corralation between Cia Brasileira and Multilaser Industrial

Assuming the 90 days trading horizon Cia Brasileira is expected to generate 3.27 times less return on investment than Multilaser Industrial. But when comparing it to its historical volatility, Cia Brasileira de is 1.06 times less risky than Multilaser Industrial. It trades about 0.03 of its potential returns per unit of risk. Multilaser Industrial SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Multilaser Industrial SA on December 30, 2024 and sell it today you would earn a total of  20.00  from holding Multilaser Industrial SA or generate 18.87% return on investment over 90 days.

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

Cia Brasileira de  vs.  Multilaser Industrial SA

Cia Brasileira de

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cia Brasileira de are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cia Brasileira may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Multilaser Industrial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Multilaser Industrial SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Multilaser Industrial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cia Brasileira and Multilaser Industrial

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

The idea behind Cia Brasileira de and Multilaser Industrial 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.