Correlation Between Armac Locacao and Smartfit Escola

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

By analyzing existing cross correlation between Armac Locacao Logistica and Smartfit Escola de, you can compare the effects of market volatilities on Armac Locacao and Smartfit Escola 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 Armac Locacao with a short position of Smartfit Escola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armac Locacao and Smartfit Escola.

Diversification Opportunities for Armac Locacao and Smartfit Escola

0.79

Correlation Coefficient

Armac Locacao  Smartfit Escola

Poor diversification

The 3 months correlation between Armac and Smartfit is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Armac Locacao Logistica and Smartfit Escola de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smartfit Escola de and Armac Locacao 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 Armac Locacao Logistica are associated (or correlated) with Smartfit Escola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smartfit Escola de has no effect on the direction of Armac Locacao i.e., Armac Locacao and Smartfit Escola go up and down completely randomly.

Pair Corralation between Armac Locacao and Smartfit Escola

Assuming the 90 days trading horizon Armac Locacao Logistica is expected to under-perform the Smartfit Escola. In addition to that, Armac Locacao is 1.53 times more volatile than Smartfit Escola de. It trades about -0.18 of its total potential returns per unit of risk. Smartfit Escola de is currently generating about -0.15 per unit of volatility. If you would invest  2,246  in Smartfit Escola de on September 17, 2024 and sell it today you would lose (456.00) from holding Smartfit Escola de or give up 20.3% of portfolio value over 90 days.

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

Armac Locacao Logistica  vs.  Smartfit Escola de

Armac Locacao Logistica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armac Locacao Logistica 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.

Smartfit Escola de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smartfit Escola de 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.

Pair Trading with Armac Locacao and Smartfit Escola

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

The idea behind Armac Locacao Logistica and Smartfit Escola de 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .