Correlation Between Magazine Luiza and Tupy SA

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

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

Diversification Opportunities for Magazine Luiza and Tupy SA

0.0

Correlation Coefficient

Magazine Luiza  Tupy SA

Pay attention - limited upside

The 3 months correlation between Magazine and Tupy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Magazine Luiza SA and Tupy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tupy SA and Magazine Luiza 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 Magazine Luiza SA are associated (or correlated) with Tupy SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tupy SA has no effect on the direction of Magazine Luiza i.e., Magazine Luiza and Tupy SA go up and down completely randomly.

Pair Corralation between Magazine Luiza and Tupy SA

If you would invest  153.00  in Magazine Luiza SA on February 22, 2024 and sell it today you would earn a total of  2.00  from holding Magazine Luiza SA or generate 1.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Magazine Luiza SA  vs.  Tupy SA

Magazine Luiza SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Magazine Luiza SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Tupy SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tupy SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tupy SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Magazine Luiza and Tupy SA

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

The idea behind Magazine Luiza SA and Tupy 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 Stocks Directory module to find actively traded stocks across global markets.