Correlation Between Multilaser Industrial and Tres Tentos

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

Diversification Opportunities for Multilaser Industrial and Tres Tentos

-0.61

Correlation Coefficient

Multilaser Industrial  Tres Tentos

Excellent diversification

The 3 months correlation between Multilaser and Tres is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Multilaser Industrial SA and Tres Tentos Agroindustrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tres Tentos Agroindu 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 Tres Tentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tres Tentos Agroindu has no effect on the direction of Multilaser Industrial i.e., Multilaser Industrial and Tres Tentos go up and down completely randomly.

Pair Corralation between Multilaser Industrial and Tres Tentos

Assuming the 90 days trading horizon Multilaser Industrial SA is expected to under-perform the Tres Tentos. In addition to that, Multilaser Industrial is 1.14 times more volatile than Tres Tentos Agroindustrial. It trades about -0.14 of its total potential returns per unit of risk. Tres Tentos Agroindustrial is currently generating about 0.11 per unit of volatility. If you would invest  1,242  in Tres Tentos Agroindustrial on September 13, 2024 and sell it today you would earn a total of  235.00  from holding Tres Tentos Agroindustrial or generate 18.92% return on investment over 90 days.

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

Multilaser Industrial SA  vs.  Tres Tentos Agroindustrial

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.

Tres Tentos Agroindu

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tres Tentos Agroindustrial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Tres Tentos unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multilaser Industrial and Tres Tentos

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

The idea behind Multilaser Industrial SA and Tres Tentos Agroindustrial 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.