Correlation Between Companhia Brasileira and Yduqs Participaes

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

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

Diversification Opportunities for Companhia Brasileira and Yduqs Participaes

0.76

Correlation Coefficient

Companhia Brasileira  Yduqs Participaes

Poor diversification

The 3 months correlation between Companhia and Yduqs is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Brasileira de and Yduqs Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yduqs Participaes and Companhia Brasileira 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 Companhia Brasileira de are associated (or correlated) with Yduqs Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yduqs Participaes has no effect on the direction of Companhia Brasileira i.e., Companhia Brasileira and Yduqs Participaes go up and down completely randomly.

Pair Corralation between Companhia Brasileira and Yduqs Participaes

Assuming the 90 days trading horizon Companhia Brasileira de is expected to under-perform the Yduqs Participaes. But the stock apears to be less risky and, when comparing its historical volatility, Companhia Brasileira de is 1.13 times less risky than Yduqs Participaes. The stock trades about -0.08 of its potential returns per unit of risk. The Yduqs Participaes SA is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,091  in Yduqs Participaes SA on September 13, 2024 and sell it today you would lose (156.00) from holding Yduqs Participaes SA or give up 14.3% of portfolio value over 90 days.

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

Companhia Brasileira de  vs.  Yduqs Participaes SA

Companhia Brasileira

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia Brasileira de 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.

Yduqs Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yduqs Participaes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Companhia Brasileira and Yduqs Participaes

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

The idea behind Companhia Brasileira de and Yduqs Participaes 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.