Correlation Between Hapvida Participaes and M Dias

Can any of the company-specific risk be diversified away by investing in both Hapvida Participaes and M Dias 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 Hapvida Participaes and M Dias into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hapvida Participaes e and M Dias Branco, you can compare the effects of market volatilities on Hapvida Participaes and M Dias 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 Hapvida Participaes with a short position of M Dias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hapvida Participaes and M Dias.

Diversification Opportunities for Hapvida Participaes and M Dias

0.88

Correlation Coefficient

Hapvida Participaes  M Dias

Very poor diversification

The 3 months correlation between Hapvida and MDIA3 is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Hapvida Participaes e and M Dias Branco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Dias Branco and Hapvida Participaes 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 Hapvida Participaes e are associated (or correlated) with M Dias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Dias Branco has no effect on the direction of Hapvida Participaes i.e., Hapvida Participaes and M Dias go up and down completely randomly.

Pair Corralation between Hapvida Participaes and M Dias

Assuming the 90 days trading horizon Hapvida Participaes e is expected to under-perform the M Dias. In addition to that, Hapvida Participaes is 1.17 times more volatile than M Dias Branco. It trades about -0.33 of its total potential returns per unit of risk. M Dias Branco is currently generating about -0.14 per unit of volatility. If you would invest  2,727  in M Dias Branco on September 12, 2024 and sell it today you would lose (527.00) from holding M Dias Branco or give up 19.33% of portfolio value over 90 days.

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

Hapvida Participaes e  vs.  M Dias Branco

Hapvida Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hapvida Participaes e 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.

M Dias Branco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days M Dias Branco 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 Hapvida Participaes and M Dias

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

The idea behind Hapvida Participaes e and M Dias Branco 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.