Correlation Between Santos Brasil and Medical Properties

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

By analyzing existing cross correlation between Santos Brasil Participaes and Medical Properties Trust,, you can compare the effects of market volatilities on Santos Brasil and Medical Properties 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 Santos Brasil with a short position of Medical Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santos Brasil and Medical Properties.

Diversification Opportunities for Santos Brasil and Medical Properties

-0.01

Correlation Coefficient

Santos Brasil  Medical Properties

Good diversification

The 3 months correlation between Santos and Medical is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Santos Brasil Participaes and Medical Properties Trust, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust, and Santos Brasil 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 Santos Brasil Participaes are associated (or correlated) with Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust, has no effect on the direction of Santos Brasil i.e., Santos Brasil and Medical Properties go up and down completely randomly.

Pair Corralation between Santos Brasil and Medical Properties

Assuming the 90 days trading horizon Santos Brasil Participaes is expected to generate 0.17 times more return on investment than Medical Properties. However, Santos Brasil Participaes is 6.05 times less risky than Medical Properties. It trades about 0.22 of its potential returns per unit of risk. Medical Properties Trust, is currently generating about -0.04 per unit of risk. If you would invest  1,290  in Santos Brasil Participaes on October 9, 2024 and sell it today you would earn a total of  25.00  from holding Santos Brasil Participaes or generate 1.94% return on investment over 90 days.

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

Santos Brasil Participaes  vs.  Medical Properties Trust,

Santos Brasil Participaes

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Santos Brasil Participaes are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Santos Brasil may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Medical Properties Trust,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medical Properties Trust, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Medical Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Santos Brasil and Medical Properties

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

The idea behind Santos Brasil Participaes and Medical Properties Trust, 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.