Correlation Between Cia De and CTEEP Companhia

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

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

Diversification Opportunities for Cia De and CTEEP Companhia

-0.08

Correlation Coefficient

Cia De  CTEEP Companhia

Good diversification

The 3 months correlation between Cia and CTEEP is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cia de Ferro and CTEEP Companhia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTEEP Companhia and Cia De 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 Cia de Ferro are associated (or correlated) with CTEEP Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTEEP Companhia has no effect on the direction of Cia De i.e., Cia De and CTEEP Companhia go up and down completely randomly.

Pair Corralation between Cia De and CTEEP Companhia

Assuming the 90 days trading horizon Cia De is expected to generate 1.15 times less return on investment than CTEEP Companhia. In addition to that, Cia De is 1.74 times more volatile than CTEEP Companhia. It trades about 0.02 of its total potential returns per unit of risk. CTEEP Companhia is currently generating about 0.03 per unit of volatility. If you would invest  2,470  in CTEEP Companhia on September 13, 2024 and sell it today you would earn a total of  48.00  from holding CTEEP Companhia or generate 1.94% return on investment over 90 days.

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

Cia de Ferro  vs.  CTEEP Companhia

Cia de Ferro

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cia de Ferro are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Cia De is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CTEEP Companhia

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CTEEP Companhia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CTEEP Companhia is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cia De and CTEEP Companhia

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

The idea behind Cia de Ferro and CTEEP Companhia 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.