Correlation Between Grendene and Guararapes Confeces
Can any of the company-specific risk be diversified away by investing in both Grendene and Guararapes Confeces 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 Grendene and Guararapes Confeces into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grendene SA and Guararapes Confeces SA, you can compare the effects of market volatilities on Grendene and Guararapes Confeces 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 Grendene with a short position of Guararapes Confeces. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grendene and Guararapes Confeces.
Diversification Opportunities for Grendene and Guararapes Confeces
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Grendene and Guararapes is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Grendene SA and Guararapes Confeces SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guararapes Confeces and Grendene 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 Grendene SA are associated (or correlated) with Guararapes Confeces. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guararapes Confeces has no effect on the direction of Grendene i.e., Grendene and Guararapes Confeces go up and down completely randomly.
Pair Corralation between Grendene and Guararapes Confeces
Assuming the 90 days trading horizon Grendene SA is expected to generate 0.39 times more return on investment than Guararapes Confeces. However, Grendene SA is 2.53 times less risky than Guararapes Confeces. It trades about -0.07 of its potential returns per unit of risk. Guararapes Confeces SA is currently generating about -0.07 per unit of risk. If you would invest 547.00 in Grendene SA on September 26, 2024 and sell it today you would lose (46.00) from holding Grendene SA or give up 8.41% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Grendene SA vs. Guararapes Confeces SA
Performance |
Timeline |
Grendene SA |
Guararapes Confeces |
Grendene and Guararapes Confeces Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Grendene and Guararapes Confeces
The main advantage of trading using opposite Grendene and Guararapes Confeces positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grendene position performs unexpectedly, Guararapes Confeces 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 Guararapes Confeces will offset losses from the drop in Guararapes Confeces' long position.Grendene vs. M Dias Branco | Grendene vs. Fleury SA | Grendene vs. Engie Brasil Energia | Grendene vs. Odontoprev SA |
Guararapes Confeces vs. Engie Brasil Energia | Guararapes Confeces vs. Grendene SA | Guararapes Confeces vs. M Dias Branco | Guararapes Confeces vs. BTG Pactual Logstica |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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