Correlation Between T4F Entretenimento and So Carlos

Can any of the company-specific risk be diversified away by investing in both T4F Entretenimento and So Carlos 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 T4F Entretenimento and So Carlos into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between T4F Entretenimento SA and So Carlos Empreendimentos, you can compare the effects of market volatilities on T4F Entretenimento and So Carlos 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 T4F Entretenimento with a short position of So Carlos. Check out your portfolio center. Please also check ongoing floating volatility patterns of T4F Entretenimento and So Carlos.

Diversification Opportunities for T4F Entretenimento and So Carlos

0.86

Correlation Coefficient

T4F Entretenimento  So Carlos

Very poor diversification

The 3 months correlation between T4F and SCAR3 is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding T4F Entretenimento SA and So Carlos Empreendimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on So Carlos Empreendimentos and T4F Entretenimento 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 T4F Entretenimento SA are associated (or correlated) with So Carlos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of So Carlos Empreendimentos has no effect on the direction of T4F Entretenimento i.e., T4F Entretenimento and So Carlos go up and down completely randomly.

Pair Corralation between T4F Entretenimento and So Carlos

Assuming the 90 days trading horizon T4F Entretenimento SA is expected to under-perform the So Carlos. In addition to that, T4F Entretenimento is 1.67 times more volatile than So Carlos Empreendimentos. It trades about -0.21 of its total potential returns per unit of risk. So Carlos Empreendimentos is currently generating about -0.12 per unit of volatility. If you would invest  2,258  in So Carlos Empreendimentos on September 27, 2024 and sell it today you would lose (299.00) from holding So Carlos Empreendimentos or give up 13.24% of portfolio value over 90 days.

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

T4F Entretenimento SA  vs.  So Carlos Empreendimentos

T4F Entretenimento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days T4F Entretenimento 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.

So Carlos Empreendimentos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days So Carlos Empreendimentos 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 T4F Entretenimento and So Carlos

The main advantage of trading using opposite T4F Entretenimento and So Carlos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T4F Entretenimento position performs unexpectedly, So Carlos 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 So Carlos will offset losses from the drop in So Carlos' long position.

The idea behind T4F Entretenimento SA and So Carlos Empreendimentos 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.