Correlation Between Bahema Educao and Ouro Fino

Can any of the company-specific risk be diversified away by investing in both Bahema Educao and Ouro Fino 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 Bahema Educao and Ouro Fino into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bahema Educao SA and Ouro Fino Sade, you can compare the effects of market volatilities on Bahema Educao and Ouro Fino 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 Bahema Educao with a short position of Ouro Fino. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bahema Educao and Ouro Fino.

Diversification Opportunities for Bahema Educao and Ouro Fino

-0.29

Correlation Coefficient

Bahema Educao  Ouro Fino

Very good diversification

The 3 months correlation between Bahema and Ouro is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bahema Educao SA and Ouro Fino Sade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ouro Fino Sade and Bahema Educao 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 Bahema Educao SA are associated (or correlated) with Ouro Fino. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ouro Fino Sade has no effect on the direction of Bahema Educao i.e., Bahema Educao and Ouro Fino go up and down completely randomly.

Pair Corralation between Bahema Educao and Ouro Fino

Assuming the 90 days trading horizon Bahema Educao SA is expected to under-perform the Ouro Fino. In addition to that, Bahema Educao is 2.81 times more volatile than Ouro Fino Sade. It trades about -0.11 of its total potential returns per unit of risk. Ouro Fino Sade is currently generating about -0.04 per unit of volatility. If you would invest  2,180  in Ouro Fino Sade on September 14, 2024 and sell it today you would lose (107.00) from holding Ouro Fino Sade or give up 4.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Bahema Educao SA  vs.  Ouro Fino Sade

Bahema Educao SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bahema Educao SA 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.

Ouro Fino Sade

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ouro Fino Sade has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ouro Fino is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bahema Educao and Ouro Fino

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

The idea behind Bahema Educao SA and Ouro Fino Sade 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.