Correlation Between EuropaCorp and Suzano SA

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

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

Diversification Opportunities for EuropaCorp and Suzano SA

-0.89

Correlation Coefficient

EuropaCorp  Suzano SA

Pay attention - limited upside

The 3 months correlation between EuropaCorp and Suzano is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding EuropaCorp and Suzano SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzano SA and EuropaCorp 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 EuropaCorp are associated (or correlated) with Suzano SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzano SA has no effect on the direction of EuropaCorp i.e., EuropaCorp and Suzano SA go up and down completely randomly.

Pair Corralation between EuropaCorp and Suzano SA

Assuming the 90 days horizon EuropaCorp is expected to under-perform the Suzano SA. In addition to that, EuropaCorp is 2.0 times more volatile than Suzano SA. It trades about -0.12 of its total potential returns per unit of risk. Suzano SA is currently generating about 0.19 per unit of volatility. If you would invest  779.00  in Suzano SA on September 20, 2024 and sell it today you would earn a total of  166.00  from holding Suzano SA or generate 21.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

EuropaCorp  vs.  Suzano SA

EuropaCorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EuropaCorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Suzano SA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Suzano SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Suzano SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EuropaCorp and Suzano SA

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

The idea behind EuropaCorp and Suzano 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.