Correlation Between Monteiro Aranha and Halliburton

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

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

Diversification Opportunities for Monteiro Aranha and Halliburton

0.34

Correlation Coefficient

Monteiro Aranha  Halliburton

Weak diversification

The 3 months correlation between Monteiro and Halliburton is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Monteiro Aranha SA and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Monteiro Aranha 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 Monteiro Aranha SA are associated (or correlated) with Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Monteiro Aranha i.e., Monteiro Aranha and Halliburton go up and down completely randomly.

Pair Corralation between Monteiro Aranha and Halliburton

Assuming the 90 days trading horizon Monteiro Aranha SA is expected to generate 0.13 times more return on investment than Halliburton. However, Monteiro Aranha SA is 7.86 times less risky than Halliburton. It trades about -0.25 of its potential returns per unit of risk. Halliburton is currently generating about -0.11 per unit of risk. If you would invest  41,100  in Monteiro Aranha SA on October 5, 2024 and sell it today you would lose (1,100) from holding Monteiro Aranha SA or give up 2.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.89%
Values	Daily Returns

Monteiro Aranha SA  vs.  Halliburton

Monteiro Aranha SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Halliburton

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Halliburton are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Halliburton may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Monteiro Aranha and Halliburton

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

The idea behind Monteiro Aranha SA and Halliburton 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.