Correlation Between Grupo Mateus and Pet Center

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

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

Diversification Opportunities for Grupo Mateus and Pet Center

0.63

Correlation Coefficient

Grupo Mateus  Pet Center

Poor diversification

The 3 months correlation between Grupo and Pet is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Mateus SA and Pet Center Comrcio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pet Center Comrcio and Grupo Mateus 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 Grupo Mateus SA are associated (or correlated) with Pet Center. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pet Center Comrcio has no effect on the direction of Grupo Mateus i.e., Grupo Mateus and Pet Center go up and down completely randomly.

Pair Corralation between Grupo Mateus and Pet Center

Assuming the 90 days trading horizon Grupo Mateus SA is expected to generate 0.47 times more return on investment than Pet Center. However, Grupo Mateus SA is 2.12 times less risky than Pet Center. It trades about -0.11 of its potential returns per unit of risk. Pet Center Comrcio is currently generating about -0.09 per unit of risk. If you would invest  716.00  in Grupo Mateus SA on September 16, 2024 and sell it today you would lose (34.00) from holding Grupo Mateus SA or give up 4.75% of portfolio value over 90 days.

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

Grupo Mateus SA  vs.  Pet Center Comrcio

Grupo Mateus SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Mateus SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Grupo Mateus is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pet Center Comrcio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pet Center Comrcio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pet Center is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Grupo Mateus and Pet Center

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

The idea behind Grupo Mateus SA and Pet Center Comrcio 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.