Correlation Between Multiexport Foods and Vapores

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

Diversification Opportunities for Multiexport Foods and Vapores

0.09

Correlation Coefficient

Multiexport Foods  Vapores

Significant diversification

The 3 months correlation between Multiexport and Vapores is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Multiexport Foods SA and Vapores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vapores 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 Vapores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vapores has no effect on the direction of Multiexport Foods i.e., Multiexport Foods and Vapores go up and down completely randomly.

Pair Corralation between Multiexport Foods and Vapores

Assuming the 90 days trading horizon Multiexport Foods SA is expected to generate 1.14 times more return on investment than Vapores. However, Multiexport Foods is 1.14 times more volatile than Vapores. It trades about 0.39 of its potential returns per unit of risk. Vapores is currently generating about -0.03 per unit of risk. If you would invest  20,786  in Multiexport Foods SA on December 27, 2024 and sell it today you would earn a total of  5,918  from holding Multiexport Foods SA or generate 28.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	80.65%
Values	Daily Returns

Multiexport Foods SA  vs.  Vapores

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 30 (%) 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.

Vapores

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vapores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vapores is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Multiexport Foods and Vapores

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

The idea behind Multiexport Foods SA and Vapores 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.