Correlation Between LESTE FDO and PBG SA

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

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

Diversification Opportunities for LESTE FDO and PBG SA

0.86

Correlation Coefficient

LESTE FDO  PBG SA

Very poor diversification

The 3 months correlation between LESTE and PBG is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding LESTE FDO INV and PBG SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PBG SA and LESTE FDO 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 LESTE FDO INV are associated (or correlated) with PBG SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PBG SA has no effect on the direction of LESTE FDO i.e., LESTE FDO and PBG SA go up and down completely randomly.

Pair Corralation between LESTE FDO and PBG SA

Assuming the 90 days trading horizon LESTE FDO INV is expected to under-perform the PBG SA. But the fund apears to be less risky and, when comparing its historical volatility, LESTE FDO INV is 2.49 times less risky than PBG SA. The fund trades about -0.16 of its potential returns per unit of risk. The PBG SA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  403.00  in PBG SA on September 17, 2024 and sell it today you would lose (12.00) from holding PBG SA or give up 2.98% of portfolio value over 90 days.

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

LESTE FDO INV  vs.  PBG SA

LESTE FDO INV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LESTE FDO INV 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.

PBG SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PBG 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.

Pair Trading with LESTE FDO and PBG SA

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

The idea behind LESTE FDO INV and PBG SA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..