Correlation Between Multilaser Industrial and Armac Locacao

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

By analyzing existing cross correlation between Multilaser Industrial SA and Armac Locacao Logistica, you can compare the effects of market volatilities on Multilaser Industrial and Armac Locacao 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 Multilaser Industrial with a short position of Armac Locacao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multilaser Industrial and Armac Locacao.

Diversification Opportunities for Multilaser Industrial and Armac Locacao

0.81

Correlation Coefficient

Multilaser Industrial  Armac Locacao

Very poor diversification

The 3 months correlation between Multilaser and Armac is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Multilaser Industrial SA and Armac Locacao Logistica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armac Locacao Logistica and Multilaser Industrial 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 Multilaser Industrial SA are associated (or correlated) with Armac Locacao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armac Locacao Logistica has no effect on the direction of Multilaser Industrial i.e., Multilaser Industrial and Armac Locacao go up and down completely randomly.

Pair Corralation between Multilaser Industrial and Armac Locacao

Assuming the 90 days trading horizon Multilaser Industrial SA is expected to generate 1.03 times more return on investment than Armac Locacao. However, Multilaser Industrial is 1.03 times more volatile than Armac Locacao Logistica. It trades about -0.23 of its potential returns per unit of risk. Armac Locacao Logistica is currently generating about -0.36 per unit of risk. If you would invest  142.00  in Multilaser Industrial SA on September 17, 2024 and sell it today you would lose (28.00) from holding Multilaser Industrial SA or give up 19.72% of portfolio value over 90 days.

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

Multilaser Industrial SA  vs.  Armac Locacao Logistica

Multilaser Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multilaser Industrial SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Armac Locacao Logistica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armac Locacao Logistica has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Multilaser Industrial and Armac Locacao

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

The idea behind Multilaser Industrial SA and Armac Locacao Logistica 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.