Correlation Between Inepar SA and Manufatura

Can any of the company-specific risk be diversified away by investing in both Inepar SA and Manufatura 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 Manufatura 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 Manufatura de Brinquedos, you can compare the effects of market volatilities on Inepar SA and Manufatura 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 Manufatura. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inepar SA and Manufatura.

Diversification Opportunities for Inepar SA and Manufatura

-0.01

Correlation Coefficient

Inepar SA  Manufatura

Good diversification

The 3 months correlation between Inepar and Manufatura is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Inepar SA Indstria and Manufatura de Brinquedos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manufatura de Brinquedos 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 Manufatura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manufatura de Brinquedos has no effect on the direction of Inepar SA i.e., Inepar SA and Manufatura go up and down completely randomly.

Pair Corralation between Inepar SA and Manufatura

Assuming the 90 days trading horizon Inepar SA Indstria is expected to under-perform the Manufatura. But the preferred stock apears to be less risky and, when comparing its historical volatility, Inepar SA Indstria is 1.77 times less risky than Manufatura. The preferred stock trades about -0.12 of its potential returns per unit of risk. The Manufatura de Brinquedos is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  373.00  in Manufatura de Brinquedos on October 7, 2024 and sell it today you would earn a total of  25.00  from holding Manufatura de Brinquedos or generate 6.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Inepar SA Indstria  vs.  Manufatura de Brinquedos

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 weak performance in the last few months, the Preferred 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.

Manufatura de Brinquedos

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Manufatura de Brinquedos are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Manufatura unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inepar SA and Manufatura

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

The idea behind Inepar SA Indstria and Manufatura de Brinquedos 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.