Correlation Between METISA Metalrgica and Kimberly Clark

Can any of the company-specific risk be diversified away by investing in both METISA Metalrgica and Kimberly Clark 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 Kimberly Clark 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 Kimberly Clark, you can compare the effects of market volatilities on METISA Metalrgica and Kimberly Clark 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 Kimberly Clark. Check out your portfolio center. Please also check ongoing floating volatility patterns of METISA Metalrgica and Kimberly Clark.

Diversification Opportunities for METISA Metalrgica and Kimberly Clark

0.18

Correlation Coefficient

METISA Metalrgica  Kimberly Clark

Average diversification

The 3 months correlation between METISA and Kimberly is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and Kimberly Clark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimberly Clark 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 Kimberly Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimberly Clark has no effect on the direction of METISA Metalrgica i.e., METISA Metalrgica and Kimberly Clark go up and down completely randomly.

Pair Corralation between METISA Metalrgica and Kimberly Clark

Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to generate 0.9 times more return on investment than Kimberly Clark. However, METISA Metalrgica Timboense is 1.11 times less risky than Kimberly Clark. It trades about 0.17 of its potential returns per unit of risk. Kimberly Clark is currently generating about -0.02 per unit of risk. If you would invest  3,643  in METISA Metalrgica Timboense on December 24, 2024 and sell it today you would earn a total of  551.00  from holding METISA Metalrgica Timboense or generate 15.12% return on investment over 90 days.

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

METISA Metalrgica Timboense  vs.  Kimberly Clark

METISA Metalrgica

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in METISA Metalrgica Timboense are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, METISA Metalrgica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kimberly Clark

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kimberly Clark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Kimberly Clark is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with METISA Metalrgica and Kimberly Clark

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

The idea behind METISA Metalrgica Timboense and Kimberly Clark 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.