Correlation Between Martifer SGPS and CTT Correios

Can any of the company-specific risk be diversified away by investing in both Martifer SGPS and CTT Correios 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 Martifer SGPS and CTT Correios into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Martifer SGPS SA and CTT Correios de, you can compare the effects of market volatilities on Martifer SGPS and CTT Correios 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 Martifer SGPS with a short position of CTT Correios. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martifer SGPS and CTT Correios.

Diversification Opportunities for Martifer SGPS and CTT Correios

-0.53

Correlation Coefficient

Martifer SGPS  CTT Correios

Excellent diversification

The 3 months correlation between Martifer and CTT is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Martifer SGPS SA and CTT Correios de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTT Correios de and Martifer SGPS 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 Martifer SGPS SA are associated (or correlated) with CTT Correios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTT Correios de has no effect on the direction of Martifer SGPS i.e., Martifer SGPS and CTT Correios go up and down completely randomly.

Pair Corralation between Martifer SGPS and CTT Correios

Assuming the 90 days trading horizon Martifer SGPS is expected to generate 1.05 times less return on investment than CTT Correios. In addition to that, Martifer SGPS is 1.23 times more volatile than CTT Correios de. It trades about 0.03 of its total potential returns per unit of risk. CTT Correios de is currently generating about 0.04 per unit of volatility. If you would invest  447.00  in CTT Correios de on September 16, 2024 and sell it today you would earn a total of  12.00  from holding CTT Correios de or generate 2.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Martifer SGPS SA  vs.  CTT Correios de

Martifer SGPS SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Martifer SGPS SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Martifer SGPS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CTT Correios de

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CTT Correios de are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CTT Correios 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 Martifer SGPS and CTT Correios

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

The idea behind Martifer SGPS SA and CTT Correios de 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.