Correlation Between Lojas Quero and K1SS34

Can any of the company-specific risk be diversified away by investing in both Lojas Quero and K1SS34 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 Lojas Quero and K1SS34 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lojas Quero Quero SA and K1SS34, you can compare the effects of market volatilities on Lojas Quero and K1SS34 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 Lojas Quero with a short position of K1SS34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lojas Quero and K1SS34.

Diversification Opportunities for Lojas Quero and K1SS34

0.47

Correlation Coefficient

Lojas Quero  K1SS34

Very weak diversification

The 3 months correlation between Lojas and K1SS34 is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lojas Quero Quero SA and K1SS34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K1SS34 and Lojas Quero 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 Lojas Quero Quero SA are associated (or correlated) with K1SS34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K1SS34 has no effect on the direction of Lojas Quero i.e., Lojas Quero and K1SS34 go up and down completely randomly.

Pair Corralation between Lojas Quero and K1SS34

Assuming the 90 days trading horizon Lojas Quero Quero SA is expected to under-perform the K1SS34. But the stock apears to be less risky and, when comparing its historical volatility, Lojas Quero Quero SA is 1.03 times less risky than K1SS34. The stock trades about -0.16 of its potential returns per unit of risk. The K1SS34 is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  9,934  in K1SS34 on September 24, 2024 and sell it today you would lose (1,222) from holding K1SS34 or give up 12.3% of portfolio value over 90 days.

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

Lojas Quero Quero SA  vs.  K1SS34

Lojas Quero Quero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lojas Quero Quero 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.

K1SS34

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days K1SS34 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Lojas Quero and K1SS34

The main advantage of trading using opposite Lojas Quero and K1SS34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lojas Quero position performs unexpectedly, K1SS34 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 K1SS34 will offset losses from the drop in K1SS34's long position.

The idea behind Lojas Quero Quero SA and K1SS34 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.