Correlation Between ASA METROPOLIS and Loft II

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

By analyzing existing cross correlation between ASA METROPOLIS FUNDO and Loft II Fundo, you can compare the effects of market volatilities on ASA METROPOLIS and Loft II 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 ASA METROPOLIS with a short position of Loft II. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASA METROPOLIS and Loft II.

Diversification Opportunities for ASA METROPOLIS and Loft II

-0.34

Correlation Coefficient

ASA METROPOLIS  Loft II

Very good diversification

The 3 months correlation between ASA and Loft is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding ASA METROPOLIS FUNDO and Loft II Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loft II Fundo and ASA METROPOLIS 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 ASA METROPOLIS FUNDO are associated (or correlated) with Loft II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loft II Fundo has no effect on the direction of ASA METROPOLIS i.e., ASA METROPOLIS and Loft II go up and down completely randomly.

Pair Corralation between ASA METROPOLIS and Loft II

Assuming the 90 days trading horizon ASA METROPOLIS FUNDO is expected to under-perform the Loft II. In addition to that, ASA METROPOLIS is 1.1 times more volatile than Loft II Fundo. It trades about -0.09 of its total potential returns per unit of risk. Loft II Fundo is currently generating about 0.13 per unit of volatility. If you would invest  362.00  in Loft II Fundo on April 23, 2025 and sell it today you would earn a total of  210.00  from holding Loft II Fundo or generate 58.01% return on investment over 90 days.

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

ASA METROPOLIS FUNDO  vs.  Loft II Fundo

ASA METROPOLIS FUNDO

Risk-Adjusted Performance

Very Weak

Over the last 90 days ASA METROPOLIS FUNDO has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's primary indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Loft II Fundo

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Loft II Fundo are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Loft II sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASA METROPOLIS and Loft II

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

The idea behind ASA METROPOLIS FUNDO and Loft II Fundo 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.