Correlation Between Cogna Educacao and Vasta Platform

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

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

Diversification Opportunities for Cogna Educacao and Vasta Platform

0.65

Correlation Coefficient

Cogna Educacao  Vasta Platform

Poor diversification

The 3 months correlation between Cogna and Vasta is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cogna Educacao SA and Vasta Platform in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vasta Platform and Cogna Educacao 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 Cogna Educacao SA are associated (or correlated) with Vasta Platform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vasta Platform has no effect on the direction of Cogna Educacao i.e., Cogna Educacao and Vasta Platform go up and down completely randomly.

Pair Corralation between Cogna Educacao and Vasta Platform

Assuming the 90 days horizon Cogna Educacao SA is expected to under-perform the Vasta Platform. In addition to that, Cogna Educacao is 2.41 times more volatile than Vasta Platform. It trades about -0.04 of its total potential returns per unit of risk. Vasta Platform is currently generating about -0.09 per unit of volatility. If you would invest  410.00  in Vasta Platform on September 13, 2024 and sell it today you would lose (192.00) from holding Vasta Platform or give up 46.83% of portfolio value over 90 days.

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

Cogna Educacao SA  vs.  Vasta Platform

Cogna Educacao SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cogna Educacao SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Vasta Platform

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vasta Platform has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Cogna Educacao and Vasta Platform

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

The idea behind Cogna Educacao SA and Vasta Platform 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.