Correlation Between Cruzeiro and Ser Educacional

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

By analyzing existing cross correlation between Cruzeiro do Sul and Ser Educacional Sa, you can compare the effects of market volatilities on Cruzeiro and Ser Educacional 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 Cruzeiro with a short position of Ser Educacional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cruzeiro and Ser Educacional.

Diversification Opportunities for Cruzeiro and Ser Educacional

0.72

Correlation Coefficient

Cruzeiro  Ser Educacional

Poor diversification

The 3 months correlation between Cruzeiro and Ser is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cruzeiro do Sul and Ser Educacional Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ser Educacional Sa and Cruzeiro 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 Cruzeiro do Sul are associated (or correlated) with Ser Educacional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ser Educacional Sa has no effect on the direction of Cruzeiro i.e., Cruzeiro and Ser Educacional go up and down completely randomly.

Pair Corralation between Cruzeiro and Ser Educacional

Assuming the 90 days trading horizon Cruzeiro do Sul is expected to generate 1.41 times more return on investment than Ser Educacional. However, Cruzeiro is 1.41 times more volatile than Ser Educacional Sa. It trades about -0.11 of its potential returns per unit of risk. Ser Educacional Sa is currently generating about -0.52 per unit of risk. If you would invest  366.00  in Cruzeiro do Sul on September 26, 2024 and sell it today you would lose (60.00) from holding Cruzeiro do Sul or give up 16.39% of portfolio value over 90 days.

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

Cruzeiro do Sul  vs.  Ser Educacional Sa

Cruzeiro do Sul

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cruzeiro do Sul has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cruzeiro is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Ser Educacional Sa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ser Educacional 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cruzeiro and Ser Educacional

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

The idea behind Cruzeiro do Sul and Ser Educacional 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.

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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.