Correlation Between Companhia Paranaense and Pershing Square

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

Diversification Opportunities for Companhia Paranaense and Pershing Square

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Companhia and Pershing is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Paranaense de and Pershing Square Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pershing Square Holdings 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 Pershing Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pershing Square Holdings has no effect on the direction of Companhia Paranaense i.e., Companhia Paranaense and Pershing Square go up and down completely randomly.

Pair Corralation between Companhia Paranaense and Pershing Square

Assuming the 90 days trading horizon Companhia Paranaense de is expected to generate 4.41 times more return on investment than Pershing Square. However, Companhia Paranaense is 4.41 times more volatile than Pershing Square Holdings. It trades about 0.03 of its potential returns per unit of risk. Pershing Square Holdings is currently generating about 0.1 per unit of risk. If you would invest  132.00  in Companhia Paranaense de on September 19, 2024 and sell it today you would earn a total of  2.00  from holding Companhia Paranaense de or generate 1.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Companhia Paranaense de  vs.  Pershing Square Holdings

 Performance 
       Timeline  
Companhia Paranaense 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Paranaense de are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Companhia Paranaense may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Pershing Square Holdings 

Risk-Adjusted Performance

0 of 100

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

Companhia Paranaense and Pershing Square Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Companhia Paranaense and Pershing Square

The main advantage of trading using opposite Companhia Paranaense and Pershing Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Paranaense position performs unexpectedly, Pershing Square 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 Pershing Square will offset losses from the drop in Pershing Square's long position.
The idea behind Companhia Paranaense de and Pershing Square Holdings 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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