Correlation Between Marcopolo and Schulz SA

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

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

Diversification Opportunities for Marcopolo and Schulz SA

-0.7

Correlation Coefficient

Marcopolo  Schulz SA

Excellent diversification

The 3 months correlation between Marcopolo and Schulz is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Marcopolo SA and Schulz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schulz 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 Schulz SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schulz SA has no effect on the direction of Marcopolo i.e., Marcopolo and Schulz SA go up and down completely randomly.

Pair Corralation between Marcopolo and Schulz SA

Assuming the 90 days trading horizon Marcopolo SA is expected to generate 1.63 times more return on investment than Schulz SA. However, Marcopolo is 1.63 times more volatile than Schulz SA. It trades about 0.07 of its potential returns per unit of risk. Schulz SA is currently generating about -0.14 per unit of risk. If you would invest  786.00  in Marcopolo SA on September 14, 2024 and sell it today you would earn a total of  64.00  from holding Marcopolo SA or generate 8.14% return on investment over 90 days.

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

Marcopolo SA  vs.  Schulz SA

Marcopolo SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marcopolo SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Marcopolo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Schulz SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schulz SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Marcopolo and Schulz SA

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

The idea behind Marcopolo SA and Schulz 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.