Correlation Between Marcopolo and Grendene

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

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

Diversification Opportunities for Marcopolo and Grendene

0.32

Correlation Coefficient

Marcopolo  Grendene

Weak diversification

The 3 months correlation between Marcopolo and Grendene is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Marcopolo SA and Grendene SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grendene 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 Grendene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grendene SA has no effect on the direction of Marcopolo i.e., Marcopolo and Grendene go up and down completely randomly.

Pair Corralation between Marcopolo and Grendene

Assuming the 90 days trading horizon Marcopolo SA is expected to under-perform the Grendene. In addition to that, Marcopolo is 1.41 times more volatile than Grendene SA. It trades about -0.01 of its total potential returns per unit of risk. Grendene SA is currently generating about 0.13 per unit of volatility. If you would invest  488.00  in Grendene SA on December 30, 2024 and sell it today you would earn a total of  79.00  from holding Grendene SA or generate 16.19% return on investment over 90 days.

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

Marcopolo SA  vs.  Grendene SA

Marcopolo SA

Risk-Adjusted Performance

Very Weak

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

Grendene SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grendene SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Grendene unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marcopolo and Grendene

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

The idea behind Marcopolo SA and Grendene 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.