Correlation Between METISA Metalrgica and HAGA SA

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

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

Diversification Opportunities for METISA Metalrgica and HAGA SA

0.2

Correlation Coefficient

METISA Metalrgica  HAGA SA

Modest diversification

The 3 months correlation between METISA and HAGA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and HAGA SA Indstria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAGA SA Indstria and METISA Metalrgica 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 METISA Metalrgica Timboense are associated (or correlated) with HAGA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAGA SA Indstria has no effect on the direction of METISA Metalrgica i.e., METISA Metalrgica and HAGA SA go up and down completely randomly.

Pair Corralation between METISA Metalrgica and HAGA SA

Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to generate 0.71 times more return on investment than HAGA SA. However, METISA Metalrgica Timboense is 1.4 times less risky than HAGA SA. It trades about 0.14 of its potential returns per unit of risk. HAGA SA Indstria is currently generating about 0.1 per unit of risk. If you would invest  3,896  in METISA Metalrgica Timboense on December 30, 2024 and sell it today you would earn a total of  443.00  from holding METISA Metalrgica Timboense or generate 11.37% return on investment over 90 days.

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

METISA Metalrgica Timboense  vs.  HAGA SA Indstria

METISA Metalrgica

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in METISA Metalrgica Timboense are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, METISA Metalrgica may actually be approaching a critical reversion point that can send shares even higher in April 2025.

HAGA SA Indstria

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HAGA SA Indstria are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HAGA SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with METISA Metalrgica and HAGA SA

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

The idea behind METISA Metalrgica Timboense and HAGA SA Indstria 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.