Correlation Between Corticeira Amorim and Boise Cascade

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

By analyzing existing cross correlation between Corticeira Amorim SGPS and Boise Cascade, you can compare the effects of market volatilities on Corticeira Amorim and Boise Cascade 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 Corticeira Amorim with a short position of Boise Cascade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corticeira Amorim and Boise Cascade.

Diversification Opportunities for Corticeira Amorim and Boise Cascade

-0.19

Correlation Coefficient

Corticeira Amorim  Boise Cascade

Good diversification

The 3 months correlation between Corticeira and Boise is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Corticeira Amorim SGPS and Boise Cascade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boise Cascade and Corticeira Amorim 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 Corticeira Amorim SGPS are associated (or correlated) with Boise Cascade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boise Cascade has no effect on the direction of Corticeira Amorim i.e., Corticeira Amorim and Boise Cascade go up and down completely randomly.

Pair Corralation between Corticeira Amorim and Boise Cascade

Assuming the 90 days horizon Corticeira Amorim SGPS is expected to under-perform the Boise Cascade. But the stock apears to be less risky and, when comparing its historical volatility, Corticeira Amorim SGPS is 2.38 times less risky than Boise Cascade. The stock trades about -0.19 of its potential returns per unit of risk. The Boise Cascade is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  12,631  in Boise Cascade on September 24, 2024 and sell it today you would lose (876.00) from holding Boise Cascade or give up 6.94% of portfolio value over 90 days.

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

Corticeira Amorim SGPS  vs.  Boise Cascade

Corticeira Amorim SGPS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corticeira Amorim SGPS 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.

Boise Cascade

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boise Cascade has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Boise Cascade is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Corticeira Amorim and Boise Cascade

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

The idea behind Corticeira Amorim SGPS and Boise Cascade 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 Transaction History module to view history of all your transactions and understand their impact on performance.