Correlation Between Tres Tentos and Multilaser Industrial

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

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

Diversification Opportunities for Tres Tentos and Multilaser Industrial

0.33

Correlation Coefficient

Tres Tentos  Multilaser Industrial

Weak diversification

The 3 months correlation between Tres and Multilaser is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Tres Tentos Agroindustrial and Multilaser Industrial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multilaser Industrial and Tres Tentos 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 Tres Tentos Agroindustrial are associated (or correlated) with Multilaser Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multilaser Industrial has no effect on the direction of Tres Tentos i.e., Tres Tentos and Multilaser Industrial go up and down completely randomly.

Pair Corralation between Tres Tentos and Multilaser Industrial

Assuming the 90 days trading horizon Tres Tentos Agroindustrial is expected to generate 0.94 times more return on investment than Multilaser Industrial. However, Tres Tentos Agroindustrial is 1.07 times less risky than Multilaser Industrial. It trades about -0.11 of its potential returns per unit of risk. Multilaser Industrial SA is currently generating about -0.12 per unit of risk. If you would invest  1,589  in Tres Tentos Agroindustrial on December 2, 2024 and sell it today you would lose (121.00) from holding Tres Tentos Agroindustrial or give up 7.61% of portfolio value over 90 days.

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

Tres Tentos Agroindustrial  vs.  Multilaser Industrial SA

Tres Tentos Agroindu

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tres Tentos Agroindustrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Tres Tentos may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Multilaser Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Multilaser Industrial SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Multilaser Industrial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tres Tentos and Multilaser Industrial

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

The idea behind Tres Tentos Agroindustrial and Multilaser Industrial 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.