Correlation Between OPERADORA and Megacable Holdings

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

By analyzing existing cross correlation between OPERADORA DE SITES and Megacable Holdings S, you can compare the effects of market volatilities on OPERADORA and Megacable Holdings 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 OPERADORA with a short position of Megacable Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of OPERADORA and Megacable Holdings.

Diversification Opportunities for OPERADORA and Megacable Holdings

0.87

Correlation Coefficient

OPERADORA  Megacable Holdings

Very poor diversification

The 3 months correlation between OPERADORA and Megacable is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding OPERADORA DE SITES and Megacable Holdings S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megacable Holdings and OPERADORA 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 OPERADORA DE SITES are associated (or correlated) with Megacable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megacable Holdings has no effect on the direction of OPERADORA i.e., OPERADORA and Megacable Holdings go up and down completely randomly.

Pair Corralation between OPERADORA and Megacable Holdings

Assuming the 90 days trading horizon OPERADORA DE SITES is expected to under-perform the Megacable Holdings. In addition to that, OPERADORA is 1.28 times more volatile than Megacable Holdings S. It trades about -0.14 of its total potential returns per unit of risk. Megacable Holdings S is currently generating about -0.17 per unit of volatility. If you would invest  4,098  in Megacable Holdings S on September 30, 2024 and sell it today you would lose (694.00) from holding Megacable Holdings S or give up 16.94% of portfolio value over 90 days.

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

OPERADORA DE SITES  vs.  Megacable Holdings S

OPERADORA DE SITES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OPERADORA DE SITES 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Megacable Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Megacable Holdings S has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with OPERADORA and Megacable Holdings

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

The idea behind OPERADORA DE SITES and Megacable Holdings S 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.