Correlation Between Hsi Malls and Companhia Paranaense

Can any of the company-specific risk be diversified away by investing in both Hsi Malls and Companhia Paranaense 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 Hsi Malls and Companhia Paranaense into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hsi Malls Fundo and Companhia Paranaense de, you can compare the effects of market volatilities on Hsi Malls and Companhia Paranaense 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 Hsi Malls with a short position of Companhia Paranaense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsi Malls and Companhia Paranaense.

Diversification Opportunities for Hsi Malls and Companhia Paranaense

0.08

Correlation Coefficient

Hsi Malls  Companhia Paranaense

Significant diversification

The 3 months correlation between Hsi and Companhia is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hsi Malls Fundo and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense and Hsi Malls 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 Hsi Malls Fundo are associated (or correlated) with Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of Hsi Malls i.e., Hsi Malls and Companhia Paranaense go up and down completely randomly.

Pair Corralation between Hsi Malls and Companhia Paranaense

Assuming the 90 days trading horizon Hsi Malls Fundo is expected to under-perform the Companhia Paranaense. But the fund apears to be less risky and, when comparing its historical volatility, Hsi Malls Fundo is 3.62 times less risky than Companhia Paranaense. The fund trades about -0.26 of its potential returns per unit of risk. The Companhia Paranaense de is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,115  in Companhia Paranaense de on September 12, 2024 and sell it today you would lose (15.00) from holding Companhia Paranaense de or give up 1.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.55%
Values	Daily Returns

Hsi Malls Fundo  vs.  Companhia Paranaense de

Hsi Malls Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hsi Malls Fundo has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's primary indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Companhia Paranaense

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Paranaense de are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Companhia Paranaense is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hsi Malls and Companhia Paranaense

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

The idea behind Hsi Malls Fundo and Companhia Paranaense de 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.