Correlation Between Cofina SGPS and Mota Engil

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

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

Diversification Opportunities for Cofina SGPS and Mota Engil

-0.46

Correlation Coefficient

Cofina SGPS  Mota Engil

Very good diversification

The 3 months correlation between Cofina and Mota is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Cofina SGPS and Mota Engil SGPS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mota Engil SGPS and Cofina SGPS 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 Cofina SGPS are associated (or correlated) with Mota Engil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mota Engil SGPS has no effect on the direction of Cofina SGPS i.e., Cofina SGPS and Mota Engil go up and down completely randomly.

Pair Corralation between Cofina SGPS and Mota Engil

Assuming the 90 days trading horizon Cofina SGPS is expected to under-perform the Mota Engil. In addition to that, Cofina SGPS is 3.99 times more volatile than Mota Engil SGPS SA. It trades about -0.05 of its total potential returns per unit of risk. Mota Engil SGPS SA is currently generating about 0.14 per unit of volatility. If you would invest  249.00  in Mota Engil SGPS SA on December 5, 2024 and sell it today you would earn a total of  54.00  from holding Mota Engil SGPS SA or generate 21.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Cofina SGPS  vs.  Mota Engil SGPS SA

Cofina SGPS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cofina SGPS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Mota Engil SGPS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mota Engil SGPS SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Mota Engil unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cofina SGPS and Mota Engil

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

The idea behind Cofina SGPS and Mota Engil SGPS 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.