Correlation Between Valid Solues and Marcopolo

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

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

Diversification Opportunities for Valid Solues and Marcopolo

-0.42

Correlation Coefficient

Valid Solues  Marcopolo

Very good diversification

The 3 months correlation between Valid and Marcopolo is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Valid Solues SA and Marcopolo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcopolo SA and Valid Solues 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 Valid Solues SA are associated (or correlated) with Marcopolo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcopolo SA has no effect on the direction of Valid Solues i.e., Valid Solues and Marcopolo go up and down completely randomly.

Pair Corralation between Valid Solues and Marcopolo

Assuming the 90 days trading horizon Valid Solues SA is expected to under-perform the Marcopolo. In addition to that, Valid Solues is 1.23 times more volatile than Marcopolo SA. It trades about -0.07 of its total potential returns per unit of risk. Marcopolo SA is currently generating about 0.18 per unit of volatility. If you would invest  672.00  in Marcopolo SA on April 24, 2025 and sell it today you would earn a total of  157.00  from holding Marcopolo SA or generate 23.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Valid Solues SA  vs.  Marcopolo SA

Valid Solues SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Valid Solues SA 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.

Marcopolo SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marcopolo SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Marcopolo unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Valid Solues and Marcopolo

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

The idea behind Valid Solues SA and Marcopolo 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.