Correlation Between Vasta Platform and Bunge

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

By analyzing existing cross correlation between Vasta Platform and Bunge Limited, you can compare the effects of market volatilities on Vasta Platform and Bunge 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 Vasta Platform with a short position of Bunge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vasta Platform and Bunge.

Diversification Opportunities for Vasta Platform and Bunge

-0.38

Correlation Coefficient

Vasta Platform  Bunge

Very good diversification

The 3 months correlation between Vasta and Bunge is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Vasta Platform and Bunge Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bunge Limited and Vasta Platform 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 Vasta Platform are associated (or correlated) with Bunge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bunge Limited has no effect on the direction of Vasta Platform i.e., Vasta Platform and Bunge go up and down completely randomly.

Pair Corralation between Vasta Platform and Bunge

Given the investment horizon of 90 days Vasta Platform is expected to under-perform the Bunge. In addition to that, Vasta Platform is 1.73 times more volatile than Bunge Limited. It trades about -0.06 of its total potential returns per unit of risk. Bunge Limited is currently generating about 0.28 per unit of volatility. If you would invest  8,339  in Bunge Limited on September 1, 2024 and sell it today you would earn a total of  635.00  from holding Bunge Limited or generate 7.61% return on investment over 90 days.

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

Vasta Platform  vs.  Bunge Limited

Vasta Platform

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vasta Platform are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vasta Platform sustained solid returns over the last few months and may actually be approaching a breakup point.

Bunge Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bunge Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Vasta Platform and Bunge

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

The idea behind Vasta Platform and Bunge Limited 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.