Correlation Between Grupo Mateus and Empreendimentos Pague

Can any of the company-specific risk be diversified away by investing in both Grupo Mateus and Empreendimentos Pague 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 Empreendimentos Pague 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 Empreendimentos Pague Menos, you can compare the effects of market volatilities on Grupo Mateus and Empreendimentos Pague 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 Empreendimentos Pague. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Mateus and Empreendimentos Pague.

Diversification Opportunities for Grupo Mateus and Empreendimentos Pague

-0.05

Correlation Coefficient

Grupo Mateus  Empreendimentos Pague

Good diversification

The 3 months correlation between Grupo and Empreendimentos is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Mateus SA and Empreendimentos Pague Menos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empreendimentos Pague 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 Empreendimentos Pague. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empreendimentos Pague has no effect on the direction of Grupo Mateus i.e., Grupo Mateus and Empreendimentos Pague go up and down completely randomly.

Pair Corralation between Grupo Mateus and Empreendimentos Pague

Assuming the 90 days trading horizon Grupo Mateus SA is expected to under-perform the Empreendimentos Pague. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Mateus SA is 1.64 times less risky than Empreendimentos Pague. The stock trades about -0.25 of its potential returns per unit of risk. The Empreendimentos Pague Menos is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  331.00  in Empreendimentos Pague Menos on October 8, 2024 and sell it today you would lose (28.00) from holding Empreendimentos Pague Menos or give up 8.46% of portfolio value over 90 days.

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

Grupo Mateus SA  vs.  Empreendimentos Pague Menos

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Empreendimentos Pague

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Empreendimentos Pague Menos are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Empreendimentos Pague unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Mateus and Empreendimentos Pague

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

The idea behind Grupo Mateus SA and Empreendimentos Pague Menos 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.