Correlation Between PBG SA and METISA Metalrgica

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

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

Diversification Opportunities for PBG SA and METISA Metalrgica

0.3

Correlation Coefficient

PBG SA  METISA Metalrgica

Weak diversification

The 3 months correlation between PBG and METISA is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding PBG SA and METISA Metalrgica Timboense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METISA Metalrgica and PBG SA 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 PBG SA are associated (or correlated) with METISA Metalrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METISA Metalrgica has no effect on the direction of PBG SA i.e., PBG SA and METISA Metalrgica go up and down completely randomly.

Pair Corralation between PBG SA and METISA Metalrgica

Assuming the 90 days trading horizon PBG SA is expected to generate 5.57 times less return on investment than METISA Metalrgica. In addition to that, PBG SA is 2.42 times more volatile than METISA Metalrgica Timboense. It trades about 0.01 of its total potential returns per unit of risk. METISA Metalrgica Timboense is currently generating about 0.14 per unit of volatility. If you would invest  3,896  in METISA Metalrgica Timboense on December 30, 2024 and sell it today you would earn a total of  443.00  from holding METISA Metalrgica Timboense or generate 11.37% return on investment over 90 days.

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

PBG SA  vs.  METISA Metalrgica Timboense

PBG SA

Risk-Adjusted Performance

Very Weak

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

METISA Metalrgica

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in METISA Metalrgica Timboense are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, METISA Metalrgica may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PBG SA and METISA Metalrgica

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

The idea behind PBG SA and METISA Metalrgica Timboense 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.