Correlation Between BTG Pactual and Bicicletas Monark

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

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

Diversification Opportunities for BTG Pactual and Bicicletas Monark

-0.34

Correlation Coefficient

BTG Pactual  Bicicletas Monark

Very good diversification

The 3 months correlation between BTG and Bicicletas is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding BTG Pactual Logstica and Bicicletas Monark SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bicicletas Monark and BTG Pactual 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 BTG Pactual Logstica are associated (or correlated) with Bicicletas Monark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bicicletas Monark has no effect on the direction of BTG Pactual i.e., BTG Pactual and Bicicletas Monark go up and down completely randomly.

Pair Corralation between BTG Pactual and Bicicletas Monark

Assuming the 90 days trading horizon BTG Pactual Logstica is expected to under-perform the Bicicletas Monark. In addition to that, BTG Pactual is 1.9 times more volatile than Bicicletas Monark SA. It trades about -0.03 of its total potential returns per unit of risk. Bicicletas Monark SA is currently generating about 0.1 per unit of volatility. If you would invest  30,800  in Bicicletas Monark SA on September 27, 2024 and sell it today you would earn a total of  700.00  from holding Bicicletas Monark SA or generate 2.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

BTG Pactual Logstica  vs.  Bicicletas Monark SA

BTG Pactual Logstica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BTG Pactual Logstica has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong essential indicators, BTG Pactual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bicicletas Monark

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bicicletas Monark SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bicicletas Monark is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BTG Pactual and Bicicletas Monark

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

The idea behind BTG Pactual Logstica and Bicicletas Monark 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.