Correlation Between Centro De and Biomm SA

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

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

Diversification Opportunities for Centro De and Biomm SA

0.44

Correlation Coefficient

Centro De  Biomm SA

Very weak diversification

The 3 months correlation between Centro and Biomm is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Centro de Imagem and Biomm SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomm SA and Centro De 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 Centro de Imagem are associated (or correlated) with Biomm SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomm SA has no effect on the direction of Centro De i.e., Centro De and Biomm SA go up and down completely randomly.

Pair Corralation between Centro De and Biomm SA

Assuming the 90 days trading horizon Centro de Imagem is expected to under-perform the Biomm SA. But the stock apears to be less risky and, when comparing its historical volatility, Centro de Imagem is 1.31 times less risky than Biomm SA. The stock trades about -0.16 of its potential returns per unit of risk. The Biomm SA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  882.00  in Biomm SA on September 4, 2024 and sell it today you would lose (94.00) from holding Biomm SA or give up 10.66% of portfolio value over 90 days.

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

Centro de Imagem  vs.  Biomm SA

Centro de Imagem

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centro de Imagem 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Biomm SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biomm SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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 Centro De and Biomm SA

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

The idea behind Centro de Imagem and Biomm 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.