Correlation Between Aerostar Bacau and Patria Bank

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

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

Diversification Opportunities for Aerostar Bacau and Patria Bank

-0.36

Correlation Coefficient

Aerostar Bacau  Patria Bank

Very good diversification

The 3 months correlation between Aerostar and Patria is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Aerostar Bacau and Patria Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Bank SA and Aerostar Bacau 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 Aerostar Bacau are associated (or correlated) with Patria Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Bank SA has no effect on the direction of Aerostar Bacau i.e., Aerostar Bacau and Patria Bank go up and down completely randomly.

Pair Corralation between Aerostar Bacau and Patria Bank

Assuming the 90 days trading horizon Aerostar Bacau is expected to under-perform the Patria Bank. In addition to that, Aerostar Bacau is 1.2 times more volatile than Patria Bank SA. It trades about -0.04 of its total potential returns per unit of risk. Patria Bank SA is currently generating about 0.08 per unit of volatility. If you would invest  7.45  in Patria Bank SA on September 13, 2024 and sell it today you would earn a total of  0.55  from holding Patria Bank SA or generate 7.38% return on investment over 90 days.

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

Aerostar Bacau  vs.  Patria Bank SA

Aerostar Bacau

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aerostar Bacau has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Aerostar Bacau is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Patria Bank SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Bank SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking signals, Patria Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aerostar Bacau and Patria Bank

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

The idea behind Aerostar Bacau and Patria Bank 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.