Correlation Between Companhia and Triunfo Participaes

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

By analyzing existing cross correlation between Companhia de Gs and Triunfo Participaes e, you can compare the effects of market volatilities on Companhia and Triunfo Participaes 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 Companhia with a short position of Triunfo Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia and Triunfo Participaes.

Diversification Opportunities for Companhia and Triunfo Participaes

0.81

Correlation Coefficient

Companhia  Triunfo Participaes

Very poor diversification

The 3 months correlation between Companhia and Triunfo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Companhia de Gs and Triunfo Participaes e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triunfo Participaes and Companhia 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 Companhia de Gs are associated (or correlated) with Triunfo Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triunfo Participaes has no effect on the direction of Companhia i.e., Companhia and Triunfo Participaes go up and down completely randomly.

Pair Corralation between Companhia and Triunfo Participaes

Assuming the 90 days trading horizon Companhia de Gs is expected to under-perform the Triunfo Participaes. But the stock apears to be less risky and, when comparing its historical volatility, Companhia de Gs is 1.44 times less risky than Triunfo Participaes. The stock trades about -0.14 of its potential returns per unit of risk. The Triunfo Participaes e is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  700.00  in Triunfo Participaes e on September 5, 2024 and sell it today you would lose (27.00) from holding Triunfo Participaes e or give up 3.86% of portfolio value over 90 days.

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

Companhia de Gs  vs.  Triunfo Participaes e

Companhia de Gs

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia de Gs are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Companhia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Triunfo Participaes

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Triunfo Participaes e are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Triunfo Participaes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Companhia and Triunfo Participaes

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

The idea behind Companhia de Gs and Triunfo Participaes e 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.