Correlation Between Fras Le and Boa Safra

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

By analyzing existing cross correlation between Fras le SA and Boa Safra Sementes, you can compare the effects of market volatilities on Fras Le and Boa Safra 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 Fras Le with a short position of Boa Safra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fras Le and Boa Safra.

Diversification Opportunities for Fras Le and Boa Safra

0.02

Correlation Coefficient

Fras Le  Boa Safra

Significant diversification

The 3 months correlation between Fras and Boa is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Fras le SA and Boa Safra Sementes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boa Safra Sementes and Fras Le 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 Fras le SA are associated (or correlated) with Boa Safra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boa Safra Sementes has no effect on the direction of Fras Le i.e., Fras Le and Boa Safra go up and down completely randomly.

Pair Corralation between Fras Le and Boa Safra

Assuming the 90 days trading horizon Fras le SA is expected to generate 0.68 times more return on investment than Boa Safra. However, Fras le SA is 1.48 times less risky than Boa Safra. It trades about 0.11 of its potential returns per unit of risk. Boa Safra Sementes is currently generating about 0.03 per unit of risk. If you would invest  931.00  in Fras le SA on September 4, 2024 and sell it today you would earn a total of  1,097  from holding Fras le SA or generate 117.83% return on investment over 90 days.

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

Fras le SA  vs.  Boa Safra Sementes

Fras le SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Boa Safra Sementes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boa Safra Sementes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 Fras Le and Boa Safra

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

The idea behind Fras le SA and Boa Safra Sementes 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..