Correlation Between Cia De and Tupy SA

Can any of the company-specific risk be diversified away by investing in both Cia De and Tupy 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 Cia De and Tupy SA 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 Tupy SA, you can compare the effects of market volatilities on Cia De and Tupy 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 Cia De with a short position of Tupy SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cia De and Tupy SA.

Diversification Opportunities for Cia De and Tupy SA

0.42

Correlation Coefficient

Cia De  Tupy SA

Very weak diversification

The 3 months correlation between Cia and Tupy is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cia de Ferro and Tupy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tupy SA 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 Tupy SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tupy SA has no effect on the direction of Cia De i.e., Cia De and Tupy SA go up and down completely randomly.

Pair Corralation between Cia De and Tupy SA

Assuming the 90 days trading horizon Cia de Ferro is expected to generate 1.25 times more return on investment than Tupy SA. However, Cia De is 1.25 times more volatile than Tupy SA. It trades about 0.01 of its potential returns per unit of risk. Tupy SA is currently generating about -0.32 per unit of risk. If you would invest  779.00  in Cia de Ferro on September 3, 2024 and sell it today you would earn a total of  1.00  from holding Cia de Ferro or generate 0.13% return on investment over 90 days.

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

Cia de Ferro  vs.  Tupy SA

Cia de Ferro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cia de Ferro has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Tupy SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tupy 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 Cia De and Tupy SA

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

The idea behind Cia de Ferro and Tupy 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.