Correlation Between Martin Marietta and Mdica Sur

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

By analyzing existing cross correlation between Martin Marietta Materials and Mdica Sur SAB, you can compare the effects of market volatilities on Martin Marietta and Mdica Sur 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 Martin Marietta with a short position of Mdica Sur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Mdica Sur.

Diversification Opportunities for Martin Marietta and Mdica Sur

-0.25

Correlation Coefficient

Martin Marietta  Mdica Sur

Very good diversification

The 3 months correlation between Martin and Mdica is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Mdica Sur SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mdica Sur SAB and Martin Marietta 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 Martin Marietta Materials are associated (or correlated) with Mdica Sur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mdica Sur SAB has no effect on the direction of Martin Marietta i.e., Martin Marietta and Mdica Sur go up and down completely randomly.

Pair Corralation between Martin Marietta and Mdica Sur

Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 2.81 times more return on investment than Mdica Sur. However, Martin Marietta is 2.81 times more volatile than Mdica Sur SAB. It trades about -0.03 of its potential returns per unit of risk. Mdica Sur SAB is currently generating about -0.14 per unit of risk. If you would invest  1,114,857  in Martin Marietta Materials on October 23, 2024 and sell it today you would lose (17,308) from holding Martin Marietta Materials or give up 1.55% of portfolio value over 90 days.

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

Martin Marietta Materials  vs.  Mdica Sur SAB

Martin Marietta Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Martin Marietta Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Martin Marietta is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mdica Sur SAB

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mdica Sur SAB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Mdica Sur sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Martin Marietta and Mdica Sur

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

The idea behind Martin Marietta Materials and Mdica Sur SAB 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.