Correlation Between Hypera SA and M Dias

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

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

Diversification Opportunities for Hypera SA and M Dias

0.77

Correlation Coefficient

Hypera SA  M Dias

Poor diversification

The 3 months correlation between Hypera and MDIA3 is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hypera SA and M Dias Branco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Dias Branco and Hypera 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 Hypera SA are associated (or correlated) with M Dias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Dias Branco has no effect on the direction of Hypera SA i.e., Hypera SA and M Dias go up and down completely randomly.

Pair Corralation between Hypera SA and M Dias

Assuming the 90 days trading horizon Hypera SA is expected to under-perform the M Dias. But the stock apears to be less risky and, when comparing its historical volatility, Hypera SA is 1.69 times less risky than M Dias. The stock trades about -0.02 of its potential returns per unit of risk. The M Dias Branco is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,184  in M Dias Branco on December 3, 2024 and sell it today you would earn a total of  62.00  from holding M Dias Branco or generate 2.84% return on investment over 90 days.

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

Hypera SA  vs.  M Dias Branco

Hypera SA

Risk-Adjusted Performance

Very Weak

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

M Dias Branco

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in M Dias Branco are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, M Dias 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 Hypera SA and M Dias

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

The idea behind Hypera SA and M Dias Branco 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.