Correlation Between Refinaria and Minupar Participaes

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

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

Diversification Opportunities for Refinaria and Minupar Participaes

-0.72

Correlation Coefficient

Refinaria  Minupar Participaes

Pay attention - limited upside

The 3 months correlation between Refinaria and Minupar is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Refinaria de Petrleos and Minupar Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minupar Participaes and Refinaria 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 Refinaria de Petrleos are associated (or correlated) with Minupar Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minupar Participaes has no effect on the direction of Refinaria i.e., Refinaria and Minupar Participaes go up and down completely randomly.

Pair Corralation between Refinaria and Minupar Participaes

Assuming the 90 days trading horizon Refinaria de Petrleos is expected to generate 1.95 times more return on investment than Minupar Participaes. However, Refinaria is 1.95 times more volatile than Minupar Participaes SA. It trades about 0.06 of its potential returns per unit of risk. Minupar Participaes SA is currently generating about 0.12 per unit of risk. If you would invest  270.00  in Refinaria de Petrleos on October 6, 2024 and sell it today you would earn a total of  9.00  from holding Refinaria de Petrleos or generate 3.33% return on investment over 90 days.

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

Refinaria de Petrleos  vs.  Minupar Participaes SA

Refinaria de Petrleos

Risk-Adjusted Performance

0 of 100

Very Weak

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

Minupar Participaes

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Minupar Participaes SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Minupar Participaes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Refinaria and Minupar Participaes

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

The idea behind Refinaria de Petrleos and Minupar Participaes 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.