Correlation Between Metalrgica Riosulense and Berkshire Hathaway

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

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

Diversification Opportunities for Metalrgica Riosulense and Berkshire Hathaway

-0.66

Correlation Coefficient

Metalrgica Riosulense  Berkshire Hathaway

Excellent diversification

The 3 months correlation between Metalrgica and Berkshire is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Metalrgica Riosulense SA and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Metalrgica Riosulense 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 Metalrgica Riosulense SA are associated (or correlated) with Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of Metalrgica Riosulense i.e., Metalrgica Riosulense and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between Metalrgica Riosulense and Berkshire Hathaway

Assuming the 90 days trading horizon Metalrgica Riosulense SA is expected to under-perform the Berkshire Hathaway. In addition to that, Metalrgica Riosulense is 1.68 times more volatile than Berkshire Hathaway. It trades about -0.11 of its total potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.13 per unit of volatility. If you would invest  13,399  in Berkshire Hathaway on October 7, 2024 and sell it today you would earn a total of  685.00  from holding Berkshire Hathaway or generate 5.11% return on investment over 90 days.

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

Metalrgica Riosulense SA  vs.  Berkshire Hathaway

Metalrgica Riosulense

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metalrgica Riosulense SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Preferred 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.

Berkshire Hathaway

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Berkshire Hathaway sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metalrgica Riosulense and Berkshire Hathaway

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

The idea behind Metalrgica Riosulense SA and Berkshire Hathaway 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.