Correlation Between Meridia Real and Linea Directa

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

By analyzing existing cross correlation between Meridia Real Estate and Linea Directa Aseguradora, you can compare the effects of market volatilities on Meridia Real and Linea Directa 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 Meridia Real with a short position of Linea Directa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridia Real and Linea Directa.

Diversification Opportunities for Meridia Real and Linea Directa

-0.6

Correlation Coefficient

Meridia Real  Linea Directa

Excellent diversification

The 3 months correlation between Meridia and Linea is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Meridia Real Estate and Linea Directa Aseguradora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linea Directa Aseguradora and Meridia Real 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 Meridia Real Estate are associated (or correlated) with Linea Directa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linea Directa Aseguradora has no effect on the direction of Meridia Real i.e., Meridia Real and Linea Directa go up and down completely randomly.

Pair Corralation between Meridia Real and Linea Directa

Assuming the 90 days trading horizon Meridia Real Estate is expected to under-perform the Linea Directa. But the stock apears to be less risky and, when comparing its historical volatility, Meridia Real Estate is 10.7 times less risky than Linea Directa. The stock trades about -0.13 of its potential returns per unit of risk. The Linea Directa Aseguradora is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  116.00  in Linea Directa Aseguradora on April 22, 2025 and sell it today you would earn a total of  19.00  from holding Linea Directa Aseguradora or generate 16.38% return on investment over 90 days.

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

Meridia Real Estate  vs.  Linea Directa Aseguradora

Meridia Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Meridia Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Meridia Real is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Linea Directa Aseguradora

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Linea Directa Aseguradora are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Linea Directa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Meridia Real and Linea Directa

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

The idea behind Meridia Real Estate and Linea Directa Aseguradora 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.