Correlation Between Plascar Participaes and Lupatech

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

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

Diversification Opportunities for Plascar Participaes and Lupatech

0.13

Correlation Coefficient

Plascar Participaes  Lupatech

Average diversification

The 3 months correlation between Plascar and Lupatech is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Plascar Participaes Industriai and Lupatech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupatech SA and Plascar Participaes 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 Plascar Participaes Industriais are associated (or correlated) with Lupatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupatech SA has no effect on the direction of Plascar Participaes i.e., Plascar Participaes and Lupatech go up and down completely randomly.

Pair Corralation between Plascar Participaes and Lupatech

Assuming the 90 days trading horizon Plascar Participaes Industriais is expected to under-perform the Lupatech. In addition to that, Plascar Participaes is 1.17 times more volatile than Lupatech SA. It trades about -0.06 of its total potential returns per unit of risk. Lupatech SA is currently generating about -0.05 per unit of volatility. If you would invest  144.00  in Lupatech SA on September 14, 2024 and sell it today you would lose (14.00) from holding Lupatech SA or give up 9.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Plascar Participaes Industriai  vs.  Lupatech SA

Plascar Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plascar Participaes Industriais has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Lupatech SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lupatech SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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 Plascar Participaes and Lupatech

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

The idea behind Plascar Participaes Industriais and Lupatech 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.