Correlation Between Bombril SA and Inepar SA

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

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

Diversification Opportunities for Bombril SA and Inepar SA

-0.1

Correlation Coefficient

Bombril SA  Inepar SA

Good diversification

The 3 months correlation between Bombril and Inepar is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Bombril SA and Inepar SA Indstria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inepar SA Indstria 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 Inepar SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inepar SA Indstria has no effect on the direction of Bombril SA i.e., Bombril SA and Inepar SA go up and down completely randomly.

Pair Corralation between Bombril SA and Inepar SA

Assuming the 90 days trading horizon Bombril SA is expected to generate 0.8 times more return on investment than Inepar SA. However, Bombril SA is 1.25 times less risky than Inepar SA. It trades about -0.03 of its potential returns per unit of risk. Inepar SA Indstria is currently generating about -0.06 per unit of risk. If you would invest  228.00  in Bombril SA on September 13, 2024 and sell it today you would lose (17.00) from holding Bombril SA or give up 7.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Bombril SA  vs.  Inepar SA Indstria

Bombril SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bombril SA has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Inepar SA Indstria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inepar SA Indstria has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Preferred 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 Bombril SA and Inepar SA

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

The idea behind Bombril SA and Inepar SA Indstria 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..