Correlation Between Moura Dubeux and SIMPAR SA

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

By analyzing existing cross correlation between Moura Dubeux Engenharia and SIMPAR SA, you can compare the effects of market volatilities on Moura Dubeux and SIMPAR SA 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 Moura Dubeux with a short position of SIMPAR SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moura Dubeux and SIMPAR SA.

Diversification Opportunities for Moura Dubeux and SIMPAR SA

0.57

Correlation Coefficient

Moura Dubeux  SIMPAR SA

Very weak diversification

The 3 months correlation between Moura and SIMPAR is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Moura Dubeux Engenharia and SIMPAR SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMPAR SA and Moura Dubeux 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 Moura Dubeux Engenharia are associated (or correlated) with SIMPAR SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMPAR SA has no effect on the direction of Moura Dubeux i.e., Moura Dubeux and SIMPAR SA go up and down completely randomly.

Pair Corralation between Moura Dubeux and SIMPAR SA

Assuming the 90 days trading horizon Moura Dubeux Engenharia is expected to generate 0.61 times more return on investment than SIMPAR SA. However, Moura Dubeux Engenharia is 1.64 times less risky than SIMPAR SA. It trades about 0.19 of its potential returns per unit of risk. SIMPAR SA is currently generating about 0.08 per unit of risk. If you would invest  1,094  in Moura Dubeux Engenharia on December 22, 2024 and sell it today you would earn a total of  311.00  from holding Moura Dubeux Engenharia or generate 28.43% return on investment over 90 days.

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

Moura Dubeux Engenharia  vs.  SIMPAR SA

Moura Dubeux Engenharia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Moura Dubeux Engenharia are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Moura Dubeux unveiled solid returns over the last few months and may actually be approaching a breakup point.

SIMPAR SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SIMPAR SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SIMPAR SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Moura Dubeux and SIMPAR SA

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

The idea behind Moura Dubeux Engenharia and SIMPAR 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.