Correlation Between Vale SA and Cury Construtora

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

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

Diversification Opportunities for Vale SA and Cury Construtora

0.65

Correlation Coefficient

Vale SA  Cury Construtora

Poor diversification

The 3 months correlation between Vale and Cury is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and Cury Construtora e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cury Construtora e and Vale SA 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 Vale SA are associated (or correlated) with Cury Construtora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cury Construtora e has no effect on the direction of Vale SA i.e., Vale SA and Cury Construtora go up and down completely randomly.

Pair Corralation between Vale SA and Cury Construtora

Assuming the 90 days trading horizon Vale SA is expected to generate 0.86 times more return on investment than Cury Construtora. However, Vale SA is 1.17 times less risky than Cury Construtora. It trades about -0.12 of its potential returns per unit of risk. Cury Construtora e is currently generating about -0.14 per unit of risk. If you would invest  6,296  in Vale SA on September 28, 2024 and sell it today you would lose (795.00) from holding Vale SA or give up 12.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Vale SA  vs.  Cury Construtora e

Vale SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vale SA 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.

Cury Construtora e

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cury Construtora e 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 Vale SA and Cury Construtora

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

The idea behind Vale SA and Cury Construtora e 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.