Correlation Between Multiexport Foods and Plaza SA

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

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

Diversification Opportunities for Multiexport Foods and Plaza SA

-0.37

Correlation Coefficient

Multiexport Foods  Plaza SA

Very good diversification

The 3 months correlation between Multiexport and Plaza is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Multiexport Foods SA and Plaza SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza SA and Multiexport Foods 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 Multiexport Foods SA are associated (or correlated) with Plaza SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza SA has no effect on the direction of Multiexport Foods i.e., Multiexport Foods and Plaza SA go up and down completely randomly.

Pair Corralation between Multiexport Foods and Plaza SA

Assuming the 90 days trading horizon Multiexport Foods SA is expected to generate 0.63 times more return on investment than Plaza SA. However, Multiexport Foods SA is 1.59 times less risky than Plaza SA. It trades about 0.25 of its potential returns per unit of risk. Plaza SA is currently generating about 0.08 per unit of risk. If you would invest  18,809  in Multiexport Foods SA on September 5, 2024 and sell it today you would earn a total of  1,588  from holding Multiexport Foods SA or generate 8.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.0%
Values	Daily Returns

Multiexport Foods SA  vs.  Plaza SA

Multiexport Foods

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multiexport Foods SA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Multiexport Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Plaza SA

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plaza SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Plaza SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Multiexport Foods and Plaza SA

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

The idea behind Multiexport Foods SA and Plaza SA 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.