Correlation Between METISA Metalrgica and DTCOM Direct

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

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

Diversification Opportunities for METISA Metalrgica and DTCOM Direct

-0.3

Correlation Coefficient

METISA Metalrgica  DTCOM Direct

Very good diversification

The 3 months correlation between METISA and DTCOM is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and DTCOM Direct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTCOM Direct and METISA Metalrgica 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 METISA Metalrgica Timboense are associated (or correlated) with DTCOM Direct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DTCOM Direct has no effect on the direction of METISA Metalrgica i.e., METISA Metalrgica and DTCOM Direct go up and down completely randomly.

Pair Corralation between METISA Metalrgica and DTCOM Direct

Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to generate 0.46 times more return on investment than DTCOM Direct. However, METISA Metalrgica Timboense is 2.19 times less risky than DTCOM Direct. It trades about 0.06 of its potential returns per unit of risk. DTCOM Direct is currently generating about -0.04 per unit of risk. If you would invest  4,034  in METISA Metalrgica Timboense on April 25, 2025 and sell it today you would earn a total of  265.00  from holding METISA Metalrgica Timboense or generate 6.57% return on investment over 90 days.

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

METISA Metalrgica Timboense  vs.  DTCOM Direct

METISA Metalrgica

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in METISA Metalrgica Timboense are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, METISA Metalrgica may actually be approaching a critical reversion point that can send shares even higher in August 2025.

DTCOM Direct

Risk-Adjusted Performance

Very Weak

Over the last 90 days DTCOM Direct has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with METISA Metalrgica and DTCOM Direct

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

The idea behind METISA Metalrgica Timboense and DTCOM Direct 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.