Correlation Between Gol Intelligent and MITSUBISHI STEEL

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

By analyzing existing cross correlation between Gol Intelligent Airlines and MITSUBISHI STEEL MFG, you can compare the effects of market volatilities on Gol Intelligent and MITSUBISHI STEEL 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 Gol Intelligent with a short position of MITSUBISHI STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gol Intelligent and MITSUBISHI STEEL.

Diversification Opportunities for Gol Intelligent and MITSUBISHI STEEL

0.0

Correlation Coefficient

Gol Intelligent  MITSUBISHI STEEL

Pay attention - limited upside

The 3 months correlation between Gol and MITSUBISHI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gol Intelligent Airlines and MITSUBISHI STEEL MFG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MITSUBISHI STEEL MFG and Gol Intelligent 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 Gol Intelligent Airlines are associated (or correlated) with MITSUBISHI STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MITSUBISHI STEEL MFG has no effect on the direction of Gol Intelligent i.e., Gol Intelligent and MITSUBISHI STEEL go up and down completely randomly.

Pair Corralation between Gol Intelligent and MITSUBISHI STEEL

If you would invest  935.00  in MITSUBISHI STEEL MFG on December 2, 2024 and sell it today you would earn a total of  105.00  from holding MITSUBISHI STEEL MFG or generate 11.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

Gol Intelligent Airlines  vs.  MITSUBISHI STEEL MFG

Gol Intelligent Airlines

Risk-Adjusted Performance

Very Weak

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

MITSUBISHI STEEL MFG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MITSUBISHI STEEL MFG are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MITSUBISHI STEEL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gol Intelligent and MITSUBISHI STEEL

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

The idea behind Gol Intelligent Airlines and MITSUBISHI STEEL MFG 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.