Correlation Between Aesapar Fundo and Multilaser Industrial

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

By analyzing existing cross correlation between Aesapar Fundo de and Multilaser Industrial SA, you can compare the effects of market volatilities on Aesapar Fundo and Multilaser Industrial 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 Aesapar Fundo with a short position of Multilaser Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aesapar Fundo and Multilaser Industrial.

Diversification Opportunities for Aesapar Fundo and Multilaser Industrial

0.77

Correlation Coefficient

Aesapar Fundo  Multilaser Industrial

Poor diversification

The 3 months correlation between Aesapar and Multilaser is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aesapar Fundo de and Multilaser Industrial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multilaser Industrial and Aesapar Fundo 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 Aesapar Fundo de are associated (or correlated) with Multilaser Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multilaser Industrial has no effect on the direction of Aesapar Fundo i.e., Aesapar Fundo and Multilaser Industrial go up and down completely randomly.

Pair Corralation between Aesapar Fundo and Multilaser Industrial

Assuming the 90 days trading horizon Aesapar Fundo is expected to generate 12.29 times less return on investment than Multilaser Industrial. But when comparing it to its historical volatility, Aesapar Fundo de is 7.01 times less risky than Multilaser Industrial. It trades about 0.14 of its potential returns per unit of risk. Multilaser Industrial SA is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  110.00  in Multilaser Industrial SA on November 19, 2024 and sell it today you would earn a total of  17.00  from holding Multilaser Industrial SA or generate 15.45% return on investment over 90 days.

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

Aesapar Fundo de  vs.  Multilaser Industrial SA

Aesapar Fundo de

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aesapar Fundo de has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Multilaser Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Multilaser Industrial SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Multilaser Industrial 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 Aesapar Fundo and Multilaser Industrial

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

The idea behind Aesapar Fundo de and Multilaser Industrial 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.