Correlation Between METISA Metalrgica and Boa Safra

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

Diversification Opportunities for METISA Metalrgica and Boa Safra

-0.39

Correlation Coefficient

METISA Metalrgica  Boa Safra

Very good diversification

The 3 months correlation between METISA and Boa is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and Boa Safra Sementes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boa Safra Sementes 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 Boa Safra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boa Safra Sementes has no effect on the direction of METISA Metalrgica i.e., METISA Metalrgica and Boa Safra go up and down completely randomly.

Pair Corralation between METISA Metalrgica and Boa Safra

Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to generate 1.02 times more return on investment than Boa Safra. However, METISA Metalrgica is 1.02 times more volatile than Boa Safra Sementes. It trades about 0.2 of its potential returns per unit of risk. Boa Safra Sementes is currently generating about -0.03 per unit of risk. If you would invest  3,540  in METISA Metalrgica Timboense on October 11, 2024 and sell it today you would earn a total of  285.00  from holding METISA Metalrgica Timboense or generate 8.05% return on investment over 90 days.

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

METISA Metalrgica Timboense  vs.  Boa Safra Sementes

METISA Metalrgica

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in METISA Metalrgica Timboense are ranked lower than 5 (%) 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 February 2025.

Boa Safra Sementes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boa Safra Sementes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with METISA Metalrgica and Boa Safra

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

The idea behind METISA Metalrgica Timboense and Boa Safra Sementes 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.