Correlation Between Multiexport Foods and Fondo Mutuo

Can any of the company-specific risk be diversified away by investing in both Multiexport Foods and Fondo Mutuo 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 Fondo Mutuo 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 Fondo Mutuo ETF, you can compare the effects of market volatilities on Multiexport Foods and Fondo Mutuo 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 Fondo Mutuo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multiexport Foods and Fondo Mutuo.

Diversification Opportunities for Multiexport Foods and Fondo Mutuo

0.71

Correlation Coefficient

Multiexport Foods  Fondo Mutuo

Poor diversification

The 3 months correlation between Multiexport and Fondo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Multiexport Foods SA and Fondo Mutuo ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fondo Mutuo ETF 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 Fondo Mutuo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fondo Mutuo ETF has no effect on the direction of Multiexport Foods i.e., Multiexport Foods and Fondo Mutuo go up and down completely randomly.

Pair Corralation between Multiexport Foods and Fondo Mutuo

Assuming the 90 days trading horizon Multiexport Foods is expected to generate 2.56 times less return on investment than Fondo Mutuo. In addition to that, Multiexport Foods is 1.49 times more volatile than Fondo Mutuo ETF. It trades about 0.01 of its total potential returns per unit of risk. Fondo Mutuo ETF is currently generating about 0.04 per unit of volatility. If you would invest  126,352  in Fondo Mutuo ETF on June 20, 2024 and sell it today you would earn a total of  7,058  from holding Fondo Mutuo ETF or generate 5.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	75.61%
Values	Daily Returns

Multiexport Foods SA  vs.  Fondo Mutuo ETF

Multiexport Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multiexport Foods SA 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 essential indicators remain somewhat strong which may send shares a bit higher in October 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Fondo Mutuo ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fondo Mutuo ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Fondo Mutuo is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Multiexport Foods and Fondo Mutuo

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

The idea behind Multiexport Foods SA and Fondo Mutuo ETF 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.