Correlation Between Iochpe Maxion and JHSF Participaes

Can any of the company-specific risk be diversified away by investing in both Iochpe Maxion and JHSF Participaes 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 Iochpe Maxion and JHSF Participaes into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Iochpe Maxion and JHSF Participaes

0.46

Correlation Coefficient

Iochpe Maxion  JHSF Participaes

Very weak diversification

The 3 months correlation between Iochpe and JHSF is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Iochpe Maxion SA and JHSF Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JHSF Participaes and Iochpe Maxion 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 Iochpe Maxion SA are associated (or correlated) with JHSF Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JHSF Participaes has no effect on the direction of Iochpe Maxion i.e., Iochpe Maxion and JHSF Participaes go up and down completely randomly.

Pair Corralation between Iochpe Maxion and JHSF Participaes

Assuming the 90 days trading horizon Iochpe Maxion SA is expected to generate 1.11 times more return on investment than JHSF Participaes. However, Iochpe Maxion is 1.11 times more volatile than JHSF Participaes SA. It trades about 0.08 of its potential returns per unit of risk. JHSF Participaes SA is currently generating about 0.08 per unit of risk. If you would invest  1,111  in Iochpe Maxion SA on December 28, 2024 and sell it today you would earn a total of  102.00  from holding Iochpe Maxion SA or generate 9.18% return on investment over 90 days.

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

Iochpe Maxion SA  vs.  JHSF Participaes SA

Iochpe Maxion SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Iochpe Maxion SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Iochpe Maxion may actually be approaching a critical reversion point that can send shares even higher in April 2025.

JHSF Participaes

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JHSF Participaes SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, JHSF Participaes may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Iochpe Maxion and JHSF Participaes

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

The idea behind Iochpe Maxion SA and JHSF Participaes 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.