Correlation Between Amazonas Florestal and Regen BioPharma

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

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

Diversification Opportunities for Amazonas Florestal and Regen BioPharma

0.17

Correlation Coefficient

Amazonas Florestal  Regen BioPharma

Average diversification

The 3 months correlation between Amazonas and Regen is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Amazonas Florestal and Regen BioPharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regen BioPharma and Amazonas Florestal 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 Amazonas Florestal are associated (or correlated) with Regen BioPharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regen BioPharma has no effect on the direction of Amazonas Florestal i.e., Amazonas Florestal and Regen BioPharma go up and down completely randomly.

Pair Corralation between Amazonas Florestal and Regen BioPharma

Given the investment horizon of 90 days Amazonas Florestal is expected to generate 4.5 times more return on investment than Regen BioPharma. However, Amazonas Florestal is 4.5 times more volatile than Regen BioPharma. It trades about 0.16 of its potential returns per unit of risk. Regen BioPharma is currently generating about 0.16 per unit of risk. If you would invest  0.01  in Amazonas Florestal on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Amazonas Florestal or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Amazonas Florestal  vs.  Regen BioPharma

Amazonas Florestal

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazonas Florestal are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Amazonas Florestal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Regen BioPharma

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Regen BioPharma are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Regen BioPharma reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amazonas Florestal and Regen BioPharma

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

The idea behind Amazonas Florestal and Regen BioPharma 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 Anywhere module to track or share privately all of your investments from the convenience of any device.