Correlation Between Grupo SBF and Mliuz SA

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

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

Diversification Opportunities for Grupo SBF and Mliuz SA

0.08

Correlation Coefficient

Grupo SBF  Mliuz SA

Significant diversification

The 3 months correlation between Grupo and Mliuz is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Grupo SBF SA and Mliuz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mliuz SA and Grupo SBF 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 Grupo SBF SA are associated (or correlated) with Mliuz SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mliuz SA has no effect on the direction of Grupo SBF i.e., Grupo SBF and Mliuz SA go up and down completely randomly.

Pair Corralation between Grupo SBF and Mliuz SA

Assuming the 90 days trading horizon Grupo SBF is expected to generate 1.99 times less return on investment than Mliuz SA. But when comparing it to its historical volatility, Grupo SBF SA is 1.22 times less risky than Mliuz SA. It trades about 0.07 of its potential returns per unit of risk. Mliuz SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  275.00  in Mliuz SA on December 30, 2024 and sell it today you would earn a total of  72.00  from holding Mliuz SA or generate 26.18% return on investment over 90 days.

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

Grupo SBF SA  vs.  Mliuz SA

Grupo SBF SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo SBF SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Grupo SBF unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mliuz SA

Risk-Adjusted Performance

OK

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

Pair Trading with Grupo SBF and Mliuz SA

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

The idea behind Grupo SBF SA and Mliuz 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.