Correlation Between Companhia and Hrcules SA
Can any of the company-specific risk be diversified away by investing in both Companhia and Hrcules 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 Companhia and Hrcules SA 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 Hrcules SA , you can compare the effects of market volatilities on Companhia and Hrcules 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 Companhia with a short position of Hrcules SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia and Hrcules SA.
Diversification Opportunities for Companhia and Hrcules SA
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Companhia and Hrcules is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Companhia de Gs and Hrcules SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hrcules SA 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 Hrcules SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hrcules SA has no effect on the direction of Companhia i.e., Companhia and Hrcules SA go up and down completely randomly.
Pair Corralation between Companhia and Hrcules SA
Assuming the 90 days trading horizon Companhia de Gs is expected to generate 0.53 times more return on investment than Hrcules SA. However, Companhia de Gs is 1.87 times less risky than Hrcules SA. It trades about 0.01 of its potential returns per unit of risk. Hrcules SA is currently generating about -0.03 per unit of risk. If you would invest 12,527 in Companhia de Gs on September 24, 2024 and sell it today you would earn a total of 60.00 from holding Companhia de Gs or generate 0.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Companhia de Gs vs. Hrcules SA
Performance |
Timeline |
Companhia de Gs |
Hrcules SA |
Companhia and Hrcules SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Companhia and Hrcules SA
The main advantage of trading using opposite Companhia and Hrcules SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia position performs unexpectedly, Hrcules 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 Hrcules SA will offset losses from the drop in Hrcules SA's long position.Companhia vs. Usinas Siderrgicas de | Companhia vs. Companhia Siderrgica Nacional | Companhia vs. Gerdau SA | Companhia vs. Companhia Paranaense de |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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