Correlation Between Intelbras and Hidrovias

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

By analyzing existing cross correlation between Intelbras SA and Hidrovias do Brasil, you can compare the effects of market volatilities on Intelbras and Hidrovias 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 Intelbras with a short position of Hidrovias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intelbras and Hidrovias.

Diversification Opportunities for Intelbras and Hidrovias

0.81

Correlation Coefficient

Intelbras  Hidrovias

Very poor diversification

The 3 months correlation between Intelbras and Hidrovias is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Intelbras SA and Hidrovias do Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hidrovias do Brasil and Intelbras 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 Intelbras SA are associated (or correlated) with Hidrovias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hidrovias do Brasil has no effect on the direction of Intelbras i.e., Intelbras and Hidrovias go up and down completely randomly.

Pair Corralation between Intelbras and Hidrovias

Assuming the 90 days trading horizon Intelbras SA is expected to under-perform the Hidrovias. But the stock apears to be less risky and, when comparing its historical volatility, Intelbras SA is 1.18 times less risky than Hidrovias. The stock trades about -0.32 of its potential returns per unit of risk. The Hidrovias do Brasil is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  347.00  in Hidrovias do Brasil on September 5, 2024 and sell it today you would lose (66.00) from holding Hidrovias do Brasil or give up 19.02% of portfolio value over 90 days.

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

Intelbras SA   vs.  Hidrovias do Brasil

Intelbras SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intelbras SA 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.

Hidrovias do Brasil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hidrovias do 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 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 Intelbras and Hidrovias

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

The idea behind Intelbras SA and Hidrovias do 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.