Correlation Between Companhia Paranaense and Minerva SA

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

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

Diversification Opportunities for Companhia Paranaense and Minerva SA

0.31

Correlation Coefficient

Companhia Paranaense  Minerva SA

Weak diversification

The 3 months correlation between Companhia and Minerva is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Paranaense de and Minerva SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerva SA and Companhia Paranaense 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 Paranaense de are associated (or correlated) with Minerva SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerva SA has no effect on the direction of Companhia Paranaense i.e., Companhia Paranaense and Minerva SA go up and down completely randomly.

Pair Corralation between Companhia Paranaense and Minerva SA

Assuming the 90 days trading horizon Companhia Paranaense de is expected to generate 1.95 times more return on investment than Minerva SA. However, Companhia Paranaense is 1.95 times more volatile than Minerva SA. It trades about 0.02 of its potential returns per unit of risk. Minerva SA is currently generating about -0.14 per unit of risk. If you would invest  1,148  in Companhia Paranaense de on August 31, 2024 and sell it today you would earn a total of  12.00  from holding Companhia Paranaense de or generate 1.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.06%
Values	Daily Returns

Companhia Paranaense de  vs.  Minerva SA

Companhia Paranaense

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Paranaense de are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Companhia Paranaense may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Minerva SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Minerva SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Companhia Paranaense and Minerva SA

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

The idea behind Companhia Paranaense de and Minerva 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.