Correlation Between Marcopolo and Fras Le

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

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

Diversification Opportunities for Marcopolo and Fras Le

0.47

Correlation Coefficient

Marcopolo  Fras Le

Very weak diversification

The 3 months correlation between Marcopolo and Fras is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Marcopolo SA and Fras le SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fras le SA and Marcopolo 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 Marcopolo SA are associated (or correlated) with Fras Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fras le SA has no effect on the direction of Marcopolo i.e., Marcopolo and Fras Le go up and down completely randomly.

Pair Corralation between Marcopolo and Fras Le

Assuming the 90 days trading horizon Marcopolo SA is expected to generate 1.22 times more return on investment than Fras Le. However, Marcopolo is 1.22 times more volatile than Fras le SA. It trades about 0.18 of its potential returns per unit of risk. Fras le SA is currently generating about -0.25 per unit of risk. If you would invest  642.00  in Marcopolo SA on August 31, 2024 and sell it today you would earn a total of  52.00  from holding Marcopolo SA or generate 8.1% return on investment over 90 days.

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

Marcopolo SA  vs.  Fras le SA

Marcopolo SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marcopolo SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Marcopolo unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fras le SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fras le SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fras Le 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 Marcopolo and Fras Le

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

The idea behind Marcopolo SA and Fras le 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.