Correlation Between Companhia and Companhia

Can any of the company-specific risk be diversified away by investing in both Companhia and Companhia 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 Companhia 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 Companhia de Gs, you can compare the effects of market volatilities on Companhia and Companhia 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 Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia and Companhia.

Diversification Opportunities for Companhia and Companhia

0.61

Correlation Coefficient

Companhia  Companhia

Poor diversification

The 3 months correlation between Companhia and Companhia is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Companhia de Gs and Companhia de Gs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Gs 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 Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Gs has no effect on the direction of Companhia i.e., Companhia and Companhia go up and down completely randomly.

Pair Corralation between Companhia and Companhia

Assuming the 90 days trading horizon Companhia de Gs is expected to generate 0.98 times more return on investment than Companhia. However, Companhia de Gs is 1.02 times less risky than Companhia. It trades about 0.15 of its potential returns per unit of risk. Companhia de Gs is currently generating about -0.14 per unit of risk. If you would invest  12,347  in Companhia de Gs on September 5, 2024 and sell it today you would earn a total of  653.00  from holding Companhia de Gs or generate 5.29% return on investment over 90 days.

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

Companhia de Gs  vs.  Companhia de Gs

Companhia de Gs

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia de Gs are ranked lower than 6 (%) 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.

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.

Pair Trading with Companhia and Companhia

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

The idea behind Companhia de Gs and Companhia de Gs 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.