Correlation Between Alupar Investimento and NXP Semiconductors

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

By analyzing existing cross correlation between Alupar Investimento SA and NXP Semiconductors NV, you can compare the effects of market volatilities on Alupar Investimento and NXP Semiconductors 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 Alupar Investimento with a short position of NXP Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alupar Investimento and NXP Semiconductors.

Diversification Opportunities for Alupar Investimento and NXP Semiconductors

-0.64

Correlation Coefficient

Alupar Investimento  NXP Semiconductors

Excellent diversification

The 3 months correlation between Alupar and NXP is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alupar Investimento SA and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors and Alupar Investimento 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 Alupar Investimento SA are associated (or correlated) with NXP Semiconductors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXP Semiconductors has no effect on the direction of Alupar Investimento i.e., Alupar Investimento and NXP Semiconductors go up and down completely randomly.

Pair Corralation between Alupar Investimento and NXP Semiconductors

Assuming the 90 days trading horizon Alupar Investimento SA is expected to generate 0.63 times more return on investment than NXP Semiconductors. However, Alupar Investimento SA is 1.59 times less risky than NXP Semiconductors. It trades about 0.11 of its potential returns per unit of risk. NXP Semiconductors NV is currently generating about -0.06 per unit of risk. If you would invest  890.00  in Alupar Investimento SA on December 28, 2024 and sell it today you would earn a total of  83.00  from holding Alupar Investimento SA or generate 9.33% return on investment over 90 days.

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

Alupar Investimento SA  vs.  NXP Semiconductors NV

Alupar Investimento

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alupar Investimento SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Alupar Investimento may actually be approaching a critical reversion point that can send shares even higher in April 2025.

NXP Semiconductors

Risk-Adjusted Performance

Very Weak

Over the last 90 days NXP Semiconductors NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Alupar Investimento and NXP Semiconductors

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

The idea behind Alupar Investimento SA and NXP Semiconductors NV 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.