Correlation Between Boa Safra and Randon SA

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

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

Diversification Opportunities for Boa Safra and Randon SA

0.08

Correlation Coefficient

Boa Safra  Randon SA

Significant diversification

The 3 months correlation between Boa and Randon is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Boa Safra Sementes and Randon SA Implementos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Randon SA Implementos and Boa Safra 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 Boa Safra Sementes are associated (or correlated) with Randon SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Randon SA Implementos has no effect on the direction of Boa Safra i.e., Boa Safra and Randon SA go up and down completely randomly.

Pair Corralation between Boa Safra and Randon SA

Assuming the 90 days trading horizon Boa Safra Sementes is expected to under-perform the Randon SA. In addition to that, Boa Safra is 1.13 times more volatile than Randon SA Implementos. It trades about -0.04 of its total potential returns per unit of risk. Randon SA Implementos is currently generating about -0.02 per unit of volatility. If you would invest  1,016  in Randon SA Implementos on September 4, 2024 and sell it today you would lose (142.00) from holding Randon SA Implementos or give up 13.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Boa Safra Sementes  vs.  Randon SA Implementos

Boa Safra Sementes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boa Safra Sementes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

Randon SA Implementos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Randon SA Implementos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Randon SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Boa Safra and Randon SA

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

The idea behind Boa Safra Sementes and Randon SA Implementos 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.