Correlation Between Brait SE and Sabvest Capital

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

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

Diversification Opportunities for Brait SE and Sabvest Capital

0.87

Correlation Coefficient

Brait SE  Sabvest Capital

Very poor diversification

The 3 months correlation between Brait and Sabvest is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Brait SE and Sabvest Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabvest Capital and Brait SE 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 Brait SE are associated (or correlated) with Sabvest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabvest Capital has no effect on the direction of Brait SE i.e., Brait SE and Sabvest Capital go up and down completely randomly.

Pair Corralation between Brait SE and Sabvest Capital

Assuming the 90 days trading horizon Brait SE is expected to generate 1.13 times more return on investment than Sabvest Capital. However, Brait SE is 1.13 times more volatile than Sabvest Capital. It trades about 0.41 of its potential returns per unit of risk. Sabvest Capital is currently generating about 0.13 per unit of risk. If you would invest  10,400  in Brait SE on September 3, 2024 and sell it today you would earn a total of  9,700  from holding Brait SE or generate 93.27% return on investment over 90 days.

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

Brait SE  vs.  Sabvest Capital

Brait SE

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Brait SE are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Brait SE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sabvest Capital

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sabvest Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sabvest Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brait SE and Sabvest Capital

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

The idea behind Brait SE and Sabvest Capital 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.