Correlation Between Mapfre SA and PageGroup Plc

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

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

Diversification Opportunities for Mapfre SA and PageGroup Plc

-0.13

Correlation Coefficient

Mapfre SA  PageGroup Plc

Good diversification

The 3 months correlation between Mapfre and PageGroup is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Mapfre SA and PageGroup plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PageGroup plc and Mapfre SA 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 Mapfre SA are associated (or correlated) with PageGroup Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PageGroup plc has no effect on the direction of Mapfre SA i.e., Mapfre SA and PageGroup Plc go up and down completely randomly.

Pair Corralation between Mapfre SA and PageGroup Plc

Assuming the 90 days trading horizon Mapfre SA is expected to generate 0.89 times more return on investment than PageGroup Plc. However, Mapfre SA is 1.13 times less risky than PageGroup Plc. It trades about 0.15 of its potential returns per unit of risk. PageGroup plc is currently generating about -0.02 per unit of risk. If you would invest  243.00  in Mapfre SA on December 28, 2024 and sell it today you would earn a total of  44.00  from holding Mapfre SA or generate 18.11% return on investment over 90 days.

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

Mapfre SA  vs.  PageGroup plc

Mapfre SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mapfre SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mapfre SA reported solid returns over the last few months and may actually be approaching a breakup point.

PageGroup plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days PageGroup plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PageGroup Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mapfre SA and PageGroup Plc

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

The idea behind Mapfre SA and PageGroup plc 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 Valuation module to check real value of public entities based on technical and fundamental data.