Correlation Between Mundial SA and Este Lauder

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

By analyzing existing cross correlation between Mundial SA and The Este Lauder, you can compare the effects of market volatilities on Mundial SA and Este Lauder 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 Mundial SA with a short position of Este Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mundial SA and Este Lauder.

Diversification Opportunities for Mundial SA and Este Lauder

-0.04

Correlation Coefficient

Mundial SA  Este Lauder

Good diversification

The 3 months correlation between Mundial and Este is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Mundial SA and The Este Lauder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Este Lauder and Mundial SA 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 Mundial SA are associated (or correlated) with Este Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Este Lauder has no effect on the direction of Mundial SA i.e., Mundial SA and Este Lauder go up and down completely randomly.

Pair Corralation between Mundial SA and Este Lauder

Assuming the 90 days trading horizon Mundial SA is expected to generate 21.28 times more return on investment than Este Lauder. However, Mundial SA is 21.28 times more volatile than The Este Lauder. It trades about 0.06 of its potential returns per unit of risk. The Este Lauder is currently generating about -0.06 per unit of risk. If you would invest  996.00  in Mundial SA on September 26, 2024 and sell it today you would earn a total of  724.00  from holding Mundial SA or generate 72.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.18%
Values	Daily Returns

Mundial SA   vs.  The Este Lauder

Mundial SA

Risk-Adjusted Performance

8 of 100

OK

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

Este Lauder

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Este Lauder 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 fundamental 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 Mundial SA and Este Lauder

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

The idea behind Mundial SA and The Este Lauder 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.