Correlation Between Multilaser Industrial and Cia Brasileira

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

Diversification Opportunities for Multilaser Industrial and Cia Brasileira

0.6

Correlation Coefficient

Multilaser Industrial  Cia Brasileira

Poor diversification

The 3 months correlation between Multilaser and Cia is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Multilaser Industrial SA and Cia Brasileira de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cia Brasileira de 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 Cia Brasileira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cia Brasileira de has no effect on the direction of Multilaser Industrial i.e., Multilaser Industrial and Cia Brasileira go up and down completely randomly.

Pair Corralation between Multilaser Industrial and Cia Brasileira

Assuming the 90 days trading horizon Multilaser Industrial SA is expected to generate 1.07 times more return on investment than Cia Brasileira. However, Multilaser Industrial is 1.07 times more volatile than Cia Brasileira de. It trades about 0.1 of its potential returns per unit of risk. Cia Brasileira de is currently generating about 0.03 per unit of risk. If you would invest  106.00  in Multilaser Industrial SA on December 29, 2024 and sell it today you would earn a total of  20.00  from holding Multilaser Industrial SA or generate 18.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Multilaser Industrial SA  vs.  Cia Brasileira de

Multilaser Industrial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Multilaser Industrial SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Multilaser Industrial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cia Brasileira de

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cia Brasileira de are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cia Brasileira may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Multilaser Industrial and Cia Brasileira

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

The idea behind Multilaser Industrial SA and Cia Brasileira 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.