Correlation Between Multiexport Foods and Parq Arauco

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

Diversification Opportunities for Multiexport Foods and Parq Arauco

0.92

Correlation Coefficient

Multiexport Foods  Parq Arauco

Almost no diversification

The 3 months correlation between Multiexport and Parq is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Multiexport Foods SA and Parq Arauco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parq Arauco 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 Parq Arauco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parq Arauco has no effect on the direction of Multiexport Foods i.e., Multiexport Foods and Parq Arauco go up and down completely randomly.

Pair Corralation between Multiexport Foods and Parq Arauco

Assuming the 90 days trading horizon Multiexport Foods SA is expected to generate 1.03 times more return on investment than Parq Arauco. However, Multiexport Foods is 1.03 times more volatile than Parq Arauco. It trades about 0.3 of its potential returns per unit of risk. Parq Arauco is currently generating about 0.1 per unit of risk. If you would invest  23,300  in Multiexport Foods SA on December 2, 2024 and sell it today you would earn a total of  1,645  from holding Multiexport Foods SA or generate 7.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	77.27%
Values	Daily Returns

Multiexport Foods SA  vs.  Parq Arauco

Multiexport Foods

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Multiexport Foods SA are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Multiexport Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Parq Arauco

Risk-Adjusted Performance

OK

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

Pair Trading with Multiexport Foods and Parq Arauco

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

The idea behind Multiexport Foods SA and Parq Arauco 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.