Correlation Between Mitre Realty and GPS Participaes

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

By analyzing existing cross correlation between Mitre Realty Empreendimentos and GPS Participaes e, you can compare the effects of market volatilities on Mitre Realty and GPS Participaes 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 Mitre Realty with a short position of GPS Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitre Realty and GPS Participaes.

Diversification Opportunities for Mitre Realty and GPS Participaes

0.75

Correlation Coefficient

Mitre Realty  GPS Participaes

Poor diversification

The 3 months correlation between Mitre and GPS is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Mitre Realty Empreendimentos and GPS Participaes e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPS Participaes e and Mitre Realty 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 Mitre Realty Empreendimentos are associated (or correlated) with GPS Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPS Participaes e has no effect on the direction of Mitre Realty i.e., Mitre Realty and GPS Participaes go up and down completely randomly.

Pair Corralation between Mitre Realty and GPS Participaes

Assuming the 90 days trading horizon Mitre Realty Empreendimentos is expected to generate 1.25 times more return on investment than GPS Participaes. However, Mitre Realty is 1.25 times more volatile than GPS Participaes e. It trades about -0.03 of its potential returns per unit of risk. GPS Participaes e is currently generating about -0.12 per unit of risk. If you would invest  328.00  in Mitre Realty Empreendimentos on December 2, 2024 and sell it today you would lose (24.00) from holding Mitre Realty Empreendimentos or give up 7.32% of portfolio value over 90 days.

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

Mitre Realty Empreendimentos  vs.  GPS Participaes e

Mitre Realty Empreen

Risk-Adjusted Performance

Very Weak

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

GPS Participaes e

Risk-Adjusted Performance

Very Weak

Over the last 90 days GPS Participaes e 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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Mitre Realty and GPS Participaes

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

The idea behind Mitre Realty Empreendimentos and GPS Participaes e 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.