Correlation Between METISA Metalrgica and Patria Investments

Can any of the company-specific risk be diversified away by investing in both METISA Metalrgica and Patria Investments 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 Patria Investments 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 Patria Investments Limited, you can compare the effects of market volatilities on METISA Metalrgica and Patria Investments 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 Patria Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of METISA Metalrgica and Patria Investments.

Diversification Opportunities for METISA Metalrgica and Patria Investments

0.41

Correlation Coefficient

METISA Metalrgica  Patria Investments

Very weak diversification

The 3 months correlation between METISA and Patria is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and Patria Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments 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 Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of METISA Metalrgica i.e., METISA Metalrgica and Patria Investments go up and down completely randomly.

Pair Corralation between METISA Metalrgica and Patria Investments

Assuming the 90 days trading horizon METISA Metalrgica is expected to generate 2.4 times less return on investment than Patria Investments. In addition to that, METISA Metalrgica is 1.44 times more volatile than Patria Investments Limited. It trades about 0.1 of its total potential returns per unit of risk. Patria Investments Limited is currently generating about 0.33 per unit of volatility. If you would invest  2,902  in Patria Investments Limited on April 19, 2025 and sell it today you would earn a total of  886.00  from holding Patria Investments Limited or generate 30.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

METISA Metalrgica Timboense  vs.  Patria Investments Limited

METISA Metalrgica

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in METISA Metalrgica Timboense are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, METISA Metalrgica may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Patria Investments

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Investments Limited are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Patria Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with METISA Metalrgica and Patria Investments

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

The idea behind METISA Metalrgica Timboense and Patria Investments Limited 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 Stocks Directory module to find actively traded stocks across global markets.