Correlation Between CSHG Real and Banco ABC

Can any of the company-specific risk be diversified away by investing in both CSHG Real and Banco ABC 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 CSHG Real and Banco ABC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CSHG Real Estate and Banco ABC Brasil, you can compare the effects of market volatilities on CSHG Real and Banco ABC 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 CSHG Real with a short position of Banco ABC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSHG Real and Banco ABC.

Diversification Opportunities for CSHG Real and Banco ABC

0.84

Correlation Coefficient

CSHG Real  Banco ABC

Very poor diversification

The 3 months correlation between CSHG and Banco is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CSHG Real Estate and Banco ABC Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco ABC Brasil and CSHG Real 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 CSHG Real Estate are associated (or correlated) with Banco ABC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco ABC Brasil has no effect on the direction of CSHG Real i.e., CSHG Real and Banco ABC go up and down completely randomly.

Pair Corralation between CSHG Real and Banco ABC

Assuming the 90 days trading horizon CSHG Real Estate is expected to generate 0.81 times more return on investment than Banco ABC. However, CSHG Real Estate is 1.23 times less risky than Banco ABC. It trades about -0.16 of its potential returns per unit of risk. Banco ABC Brasil is currently generating about -0.21 per unit of risk. If you would invest  11,197  in CSHG Real Estate on September 2, 2024 and sell it today you would lose (967.00) from holding CSHG Real Estate or give up 8.64% of portfolio value over 90 days.

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

CSHG Real Estate  vs.  Banco ABC Brasil

CSHG Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSHG Real Estate has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Banco ABC Brasil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco ABC Brasil 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 Preferred 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 CSHG Real and Banco ABC

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

The idea behind CSHG Real Estate and Banco ABC Brasil 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.