Correlation Between Lojas Renner and Grupo Mateus

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

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

Diversification Opportunities for Lojas Renner and Grupo Mateus

0.8

Correlation Coefficient

Lojas Renner  Grupo Mateus

Very poor diversification

The 3 months correlation between Lojas and Grupo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lojas Renner SA and Grupo Mateus SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Mateus SA and Lojas Renner 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 Lojas Renner SA are associated (or correlated) with Grupo Mateus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Mateus SA has no effect on the direction of Lojas Renner i.e., Lojas Renner and Grupo Mateus go up and down completely randomly.

Pair Corralation between Lojas Renner and Grupo Mateus

Assuming the 90 days trading horizon Lojas Renner SA is expected to generate 1.36 times more return on investment than Grupo Mateus. However, Lojas Renner is 1.36 times more volatile than Grupo Mateus SA. It trades about 0.2 of its potential returns per unit of risk. Grupo Mateus SA is currently generating about 0.02 per unit of risk. If you would invest  1,370  in Lojas Renner SA on April 25, 2025 and sell it today you would earn a total of  393.00  from holding Lojas Renner SA or generate 28.69% return on investment over 90 days.

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

Lojas Renner SA  vs.  Grupo Mateus SA

Lojas Renner SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lojas Renner SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lojas Renner unveiled solid returns over the last few months and may actually be approaching a breakup point.

Grupo Mateus SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Mateus SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Grupo Mateus 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 Lojas Renner and Grupo Mateus

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

The idea behind Lojas Renner SA and Grupo Mateus 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.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.