Correlation Between Tupy SA and Marcopolo

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

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

Diversification Opportunities for Tupy SA and Marcopolo

-0.88

Correlation Coefficient

Tupy SA  Marcopolo

Pay attention - limited upside

The 3 months correlation between Tupy and Marcopolo is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Tupy SA and Marcopolo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcopolo SA and Tupy SA 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 Tupy SA are associated (or correlated) with Marcopolo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcopolo SA has no effect on the direction of Tupy SA i.e., Tupy SA and Marcopolo go up and down completely randomly.

Pair Corralation between Tupy SA and Marcopolo

Assuming the 90 days trading horizon Tupy SA is expected to under-perform the Marcopolo. But the stock apears to be less risky and, when comparing its historical volatility, Tupy SA is 1.13 times less risky than Marcopolo. The stock trades about -0.21 of its potential returns per unit of risk. The Marcopolo SA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  642.00  in Marcopolo SA on August 31, 2024 and sell it today you would earn a total of  52.00  from holding Marcopolo SA or generate 8.1% return on investment over 90 days.

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

Tupy SA  vs.  Marcopolo SA

Tupy SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tupy SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Marcopolo SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marcopolo SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Marcopolo unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tupy SA and Marcopolo

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

The idea behind Tupy SA and Marcopolo 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.