Correlation Between ASSOC BR and PARKEN Sport

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

By analyzing existing cross correlation between ASSOC BR FOODS and PARKEN Sport Entertainment, you can compare the effects of market volatilities on ASSOC BR and PARKEN Sport 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 ASSOC BR with a short position of PARKEN Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSOC BR and PARKEN Sport.

Diversification Opportunities for ASSOC BR and PARKEN Sport

-0.31

Correlation Coefficient

ASSOC BR  PARKEN Sport

Very good diversification

The 3 months correlation between ASSOC and PARKEN is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding ASSOC BR FOODS and PARKEN Sport Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKEN Sport Enterta and ASSOC BR 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 ASSOC BR FOODS are associated (or correlated) with PARKEN Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKEN Sport Enterta has no effect on the direction of ASSOC BR i.e., ASSOC BR and PARKEN Sport go up and down completely randomly.

Pair Corralation between ASSOC BR and PARKEN Sport

Assuming the 90 days trading horizon ASSOC BR FOODS is expected to under-perform the PARKEN Sport. But the stock apears to be less risky and, when comparing its historical volatility, ASSOC BR FOODS is 1.32 times less risky than PARKEN Sport. The stock trades about -0.08 of its potential returns per unit of risk. The PARKEN Sport Entertainment is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,650  in PARKEN Sport Entertainment on December 20, 2024 and sell it today you would earn a total of  145.00  from holding PARKEN Sport Entertainment or generate 8.79% return on investment over 90 days.

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

ASSOC BR FOODS  vs.  PARKEN Sport Entertainment

ASSOC BR FOODS

Risk-Adjusted Performance

Very Weak

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

PARKEN Sport Enterta

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PARKEN Sport Entertainment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, PARKEN Sport may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ASSOC BR and PARKEN Sport

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

The idea behind ASSOC BR FOODS and PARKEN Sport Entertainment 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.