Correlation Between Multiexport Foods and Administradora Americana

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Can any of the company-specific risk be diversified away by investing in both Multiexport Foods and Administradora Americana 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 Multiexport Foods and Administradora Americana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multiexport Foods SA and Administradora Americana de, you can compare the effects of market volatilities on Multiexport Foods and Administradora Americana 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 Multiexport Foods with a short position of Administradora Americana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multiexport Foods and Administradora Americana.

Diversification Opportunities for Multiexport Foods and Administradora Americana

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Multiexport and Administradora is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Multiexport Foods SA and Administradora Americana de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Administradora Americana and Multiexport Foods 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 Multiexport Foods SA are associated (or correlated) with Administradora Americana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Administradora Americana has no effect on the direction of Multiexport Foods i.e., Multiexport Foods and Administradora Americana go up and down completely randomly.

Pair Corralation between Multiexport Foods and Administradora Americana

Assuming the 90 days trading horizon Multiexport Foods SA is expected to generate 0.88 times more return on investment than Administradora Americana. However, Multiexport Foods SA is 1.13 times less risky than Administradora Americana. It trades about -0.04 of its potential returns per unit of risk. Administradora Americana de is currently generating about -0.05 per unit of risk. If you would invest  23,845  in Multiexport Foods SA on August 15, 2024 and sell it today you would lose (3,451) from holding Multiexport Foods SA or give up 14.47% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy78.57%
ValuesDaily Returns

Multiexport Foods SA  vs.  Administradora Americana de

 Performance 
       Timeline  
Multiexport Foods 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Multiexport Foods SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Multiexport Foods may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Administradora Americana 

Risk-Adjusted Performance

0 of 100

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

Multiexport Foods and Administradora Americana Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Multiexport Foods and Administradora Americana

The main advantage of trading using opposite Multiexport Foods and Administradora Americana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multiexport Foods position performs unexpectedly, Administradora Americana 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 Administradora Americana will offset losses from the drop in Administradora Americana's long position.
The idea behind Multiexport Foods SA and Administradora Americana de 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 CEOs Directory module to screen CEOs from public companies around the world.

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