Correlation Between Martifer SGPS and Teixeira Duarte

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

Diversification Opportunities for Martifer SGPS and Teixeira Duarte

0.12

Correlation Coefficient

Martifer SGPS  Teixeira Duarte

Average diversification

The 3 months correlation between Martifer and Teixeira is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Martifer SGPS SA and Teixeira Duarte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teixeira Duarte 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 Teixeira Duarte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teixeira Duarte has no effect on the direction of Martifer SGPS i.e., Martifer SGPS and Teixeira Duarte go up and down completely randomly.

Pair Corralation between Martifer SGPS and Teixeira Duarte

Assuming the 90 days trading horizon Martifer SGPS SA is expected to generate 1.02 times more return on investment than Teixeira Duarte. However, Martifer SGPS is 1.02 times more volatile than Teixeira Duarte. It trades about 0.02 of its potential returns per unit of risk. Teixeira Duarte is currently generating about -0.14 per unit of risk. If you would invest  173.00  in Martifer SGPS SA on September 5, 2024 and sell it today you would earn a total of  2.00  from holding Martifer SGPS SA or generate 1.16% return on investment over 90 days.

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

Martifer SGPS SA  vs.  Teixeira Duarte

Martifer SGPS SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Martifer SGPS SA are ranked lower than 1 (%) 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.

Teixeira Duarte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teixeira Duarte has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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 Martifer SGPS and Teixeira Duarte

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

The idea behind Martifer SGPS SA and Teixeira Duarte 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.