Correlation Between Marcopolo and Guararapes Confeces

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

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

Diversification Opportunities for Marcopolo and Guararapes Confeces

0.47

Correlation Coefficient

Marcopolo  Guararapes Confeces

Very weak diversification

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

Pair Corralation between Marcopolo and Guararapes Confeces

Assuming the 90 days trading horizon Marcopolo SA is expected to generate 0.72 times more return on investment than Guararapes Confeces. However, Marcopolo SA is 1.39 times less risky than Guararapes Confeces. It trades about -0.05 of its potential returns per unit of risk. Guararapes Confeces SA is currently generating about -0.03 per unit of risk. If you would invest  636.00  in Marcopolo SA on December 4, 2024 and sell it today you would lose (61.00) from holding Marcopolo SA or give up 9.59% of portfolio value over 90 days.

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

Marcopolo SA  vs.  Guararapes Confeces 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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Guararapes Confeces

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guararapes Confeces SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Marcopolo and Guararapes Confeces

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

The idea behind Marcopolo SA and Guararapes Confeces 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.