Correlation Between Inepar SA and METISA Metalrgica

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

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

Diversification Opportunities for Inepar SA and METISA Metalrgica

0.82

Correlation Coefficient

Inepar SA  METISA Metalrgica

Very poor diversification

The 3 months correlation between Inepar and METISA is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Inepar SA Indstria and METISA Metalrgica Timboense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METISA Metalrgica and Inepar 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 Inepar SA Indstria are associated (or correlated) with METISA Metalrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METISA Metalrgica has no effect on the direction of Inepar SA i.e., Inepar SA and METISA Metalrgica go up and down completely randomly.

Pair Corralation between Inepar SA and METISA Metalrgica

Assuming the 90 days trading horizon Inepar SA Indstria is expected to under-perform the METISA Metalrgica. In addition to that, Inepar SA is 1.03 times more volatile than METISA Metalrgica Timboense. It trades about -0.22 of its total potential returns per unit of risk. METISA Metalrgica Timboense is currently generating about -0.1 per unit of volatility. If you would invest  3,899  in METISA Metalrgica Timboense on September 15, 2024 and sell it today you would lose (571.00) from holding METISA Metalrgica Timboense or give up 14.64% of portfolio value over 90 days.

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

Inepar SA Indstria  vs.  METISA Metalrgica Timboense

Inepar SA Indstria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inepar SA Indstria 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

METISA Metalrgica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METISA Metalrgica Timboense 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 Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Inepar SA and METISA Metalrgica

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

The idea behind Inepar SA Indstria and METISA Metalrgica Timboense 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.