Correlation Between Martin Marietta and Unifique Telecomunicaes

Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Unifique Telecomunicaes 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 Martin Marietta and Unifique Telecomunicaes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Martin Marietta Materials, and Unifique Telecomunicaes SA, you can compare the effects of market volatilities on Martin Marietta and Unifique Telecomunicaes 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 Martin Marietta with a short position of Unifique Telecomunicaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Unifique Telecomunicaes.

Diversification Opportunities for Martin Marietta and Unifique Telecomunicaes

-0.91

Correlation Coefficient

Martin Marietta  Unifique Telecomunicaes

Pay attention - limited upside

The 3 months correlation between Martin and Unifique is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials, and Unifique Telecomunicaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unifique Telecomunicaes and Martin Marietta 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 Martin Marietta Materials, are associated (or correlated) with Unifique Telecomunicaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unifique Telecomunicaes has no effect on the direction of Martin Marietta i.e., Martin Marietta and Unifique Telecomunicaes go up and down completely randomly.

Pair Corralation between Martin Marietta and Unifique Telecomunicaes

Assuming the 90 days trading horizon Martin Marietta Materials, is expected to generate 0.76 times more return on investment than Unifique Telecomunicaes. However, Martin Marietta Materials, is 1.32 times less risky than Unifique Telecomunicaes. It trades about 0.06 of its potential returns per unit of risk. Unifique Telecomunicaes SA is currently generating about 0.01 per unit of risk. If you would invest  35,752  in Martin Marietta Materials, on October 11, 2024 and sell it today you would earn a total of  20,498  from holding Martin Marietta Materials, or generate 57.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.79%
Values	Daily Returns

Martin Marietta Materials,  vs.  Unifique Telecomunicaes SA

Martin Marietta Mate

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Martin Marietta is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Unifique Telecomunicaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unifique Telecomunicaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Martin Marietta and Unifique Telecomunicaes

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

The idea behind Martin Marietta Materials, and Unifique Telecomunicaes SA 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.