Correlation Between Gafisa SA and Marcopolo

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

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

Diversification Opportunities for Gafisa SA and Marcopolo

-0.87

Correlation Coefficient

Gafisa SA  Marcopolo

Pay attention - limited upside

The 3 months correlation between Gafisa and Marcopolo is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Gafisa SA and Marcopolo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcopolo SA and Gafisa 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 Gafisa SA are associated (or correlated) with Marcopolo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcopolo SA has no effect on the direction of Gafisa SA i.e., Gafisa SA and Marcopolo go up and down completely randomly.

Pair Corralation between Gafisa SA and Marcopolo

Assuming the 90 days trading horizon Gafisa SA is expected to under-perform the Marcopolo. In addition to that, Gafisa SA is 1.9 times more volatile than Marcopolo SA. It trades about -0.24 of its total potential returns per unit of risk. Marcopolo SA is currently generating about 0.12 per unit of volatility. If you would invest  756.00  in Marcopolo SA on August 31, 2024 and sell it today you would earn a total of  109.00  from holding Marcopolo SA or generate 14.42% return on investment over 90 days.

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

Gafisa SA  vs.  Marcopolo SA

Gafisa SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gafisa SA 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 December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Marcopolo SA

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marcopolo SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Marcopolo unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gafisa SA and Marcopolo

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

The idea behind Gafisa SA and Marcopolo 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..