Correlation Between Megacable Holdings and OPERADORA

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

By analyzing existing cross correlation between Megacable Holdings S and OPERADORA DE SITES, you can compare the effects of market volatilities on Megacable Holdings and OPERADORA 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 Megacable Holdings with a short position of OPERADORA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Megacable Holdings and OPERADORA.

Diversification Opportunities for Megacable Holdings and OPERADORA

0.87

Correlation Coefficient

Megacable Holdings  OPERADORA

Very poor diversification

The 3 months correlation between Megacable and OPERADORA is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Megacable Holdings S and OPERADORA DE SITES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPERADORA DE SITES and Megacable Holdings 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 Megacable Holdings S are associated (or correlated) with OPERADORA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPERADORA DE SITES has no effect on the direction of Megacable Holdings i.e., Megacable Holdings and OPERADORA go up and down completely randomly.

Pair Corralation between Megacable Holdings and OPERADORA

Assuming the 90 days trading horizon Megacable Holdings S is expected to under-perform the OPERADORA. But the stock apears to be less risky and, when comparing its historical volatility, Megacable Holdings S is 1.23 times less risky than OPERADORA. The stock trades about -0.1 of its potential returns per unit of risk. The OPERADORA DE SITES is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,596  in OPERADORA DE SITES on September 30, 2024 and sell it today you would lose (331.00) from holding OPERADORA DE SITES or give up 20.74% of portfolio value over 90 days.

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

Megacable Holdings S  vs.  OPERADORA DE SITES

Megacable Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Megacable Holdings S 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 Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

OPERADORA DE SITES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OPERADORA DE SITES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Megacable Holdings and OPERADORA

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

The idea behind Megacable Holdings S and OPERADORA DE SITES 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.