Correlation Between Synopsys, and Magazine Luiza

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

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

Diversification Opportunities for Synopsys, and Magazine Luiza

-0.73

Correlation Coefficient

Synopsys,  Magazine Luiza

Pay attention - limited upside

The 3 months correlation between Synopsys, and Magazine is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Synopsys, and Magazine Luiza SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magazine Luiza SA and Synopsys, 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 Synopsys, are associated (or correlated) with Magazine Luiza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magazine Luiza SA has no effect on the direction of Synopsys, i.e., Synopsys, and Magazine Luiza go up and down completely randomly.

Pair Corralation between Synopsys, and Magazine Luiza

Assuming the 90 days trading horizon Synopsys, is expected to under-perform the Magazine Luiza. But the stock apears to be less risky and, when comparing its historical volatility, Synopsys, is 2.13 times less risky than Magazine Luiza. The stock trades about -0.12 of its potential returns per unit of risk. The Magazine Luiza SA is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  653.00  in Magazine Luiza SA on December 26, 2024 and sell it today you would earn a total of  396.00  from holding Magazine Luiza SA or generate 60.64% return on investment over 90 days.

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

Synopsys,  vs.  Magazine Luiza SA

Synopsys,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Synopsys, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Magazine Luiza SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Magazine Luiza SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Magazine Luiza unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Synopsys, and Magazine Luiza

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

The idea behind Synopsys, and Magazine Luiza 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.