Correlation Between Pet Center and Grupo Mateus

Can any of the company-specific risk be diversified away by investing in both Pet Center and Grupo Mateus 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 Pet Center and Grupo Mateus into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Pet Center and Grupo Mateus

0.63

Correlation Coefficient

Pet Center  Grupo Mateus

Poor diversification

The 3 months correlation between Pet and Grupo is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pet Center Comrcio and Grupo Mateus SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Mateus SA and Pet Center 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 Pet Center Comrcio are associated (or correlated) with Grupo Mateus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Mateus SA has no effect on the direction of Pet Center i.e., Pet Center and Grupo Mateus go up and down completely randomly.

Pair Corralation between Pet Center and Grupo Mateus

Assuming the 90 days trading horizon Pet Center Comrcio is expected to under-perform the Grupo Mateus. In addition to that, Pet Center is 2.12 times more volatile than Grupo Mateus SA. It trades about -0.09 of its total potential returns per unit of risk. Grupo Mateus SA is currently generating about -0.11 per unit of volatility. If you would invest  716.00  in Grupo Mateus SA on September 16, 2024 and sell it today you would lose (34.00) from holding Grupo Mateus SA or give up 4.75% of portfolio value over 90 days.

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

Pet Center Comrcio  vs.  Grupo Mateus SA

Pet Center Comrcio

Risk-Adjusted Performance

0 of 100

Very Weak

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

Grupo Mateus SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pet Center and Grupo Mateus

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

The idea behind Pet Center Comrcio and Grupo Mateus 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.