Correlation Between Minupar Participaes and Excelsior Alimentos

Can any of the company-specific risk be diversified away by investing in both Minupar Participaes and Excelsior Alimentos 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 Minupar Participaes and Excelsior Alimentos into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Minupar Participaes and Excelsior Alimentos

-0.71

Correlation Coefficient

Minupar Participaes  Excelsior Alimentos

Pay attention - limited upside

The 3 months correlation between Minupar and Excelsior is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Minupar Participaes SA and Excelsior Alimentos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excelsior Alimentos and Minupar Participaes 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 Minupar Participaes SA are associated (or correlated) with Excelsior Alimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excelsior Alimentos has no effect on the direction of Minupar Participaes i.e., Minupar Participaes and Excelsior Alimentos go up and down completely randomly.

Pair Corralation between Minupar Participaes and Excelsior Alimentos

Assuming the 90 days trading horizon Minupar Participaes SA is expected to generate 5.04 times more return on investment than Excelsior Alimentos. However, Minupar Participaes is 5.04 times more volatile than Excelsior Alimentos SA. It trades about 0.08 of its potential returns per unit of risk. Excelsior Alimentos SA is currently generating about -0.01 per unit of risk. If you would invest  602.00  in Minupar Participaes SA on September 29, 2024 and sell it today you would earn a total of  1,498  from holding Minupar Participaes SA or generate 248.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

Minupar Participaes SA  vs.  Excelsior Alimentos SA

Minupar Participaes

Risk-Adjusted Performance

7 of 100

OK

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

Excelsior Alimentos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Excelsior Alimentos SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Excelsior Alimentos is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Minupar Participaes and Excelsior Alimentos

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

The idea behind Minupar Participaes SA and Excelsior Alimentos SA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.