Correlation Between Bombril SA and Fertilizantes Heringer

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

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

Diversification Opportunities for Bombril SA and Fertilizantes Heringer

-0.5

Correlation Coefficient

Bombril SA  Fertilizantes Heringer

Very good diversification

The 3 months correlation between Bombril and Fertilizantes is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bombril SA and Fertilizantes Heringer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fertilizantes Heringer and Bombril SA 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 Bombril SA are associated (or correlated) with Fertilizantes Heringer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fertilizantes Heringer has no effect on the direction of Bombril SA i.e., Bombril SA and Fertilizantes Heringer go up and down completely randomly.

Pair Corralation between Bombril SA and Fertilizantes Heringer

Assuming the 90 days trading horizon Bombril SA is expected to generate 1.61 times more return on investment than Fertilizantes Heringer. However, Bombril SA is 1.61 times more volatile than Fertilizantes Heringer SA. It trades about 0.04 of its potential returns per unit of risk. Fertilizantes Heringer SA is currently generating about -0.25 per unit of risk. If you would invest  209.00  in Bombril SA on September 1, 2024 and sell it today you would earn a total of  8.00  from holding Bombril SA or generate 3.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Bombril SA  vs.  Fertilizantes Heringer SA

Bombril SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bombril SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bombril SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Fertilizantes Heringer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fertilizantes Heringer 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 December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Bombril SA and Fertilizantes Heringer

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

The idea behind Bombril SA and Fertilizantes Heringer 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.