Correlation Between Bahema Educao and Profarma Distribuidora

Can any of the company-specific risk be diversified away by investing in both Bahema Educao and Profarma Distribuidora 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 Profarma Distribuidora 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 Profarma Distribuidora de, you can compare the effects of market volatilities on Bahema Educao and Profarma Distribuidora 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 Profarma Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bahema Educao and Profarma Distribuidora.

Diversification Opportunities for Bahema Educao and Profarma Distribuidora

-0.68

Correlation Coefficient

Bahema Educao  Profarma Distribuidora

Excellent diversification

The 3 months correlation between Bahema and Profarma is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bahema Educao SA and Profarma Distribuidora de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profarma Distribuidora 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 Profarma Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profarma Distribuidora has no effect on the direction of Bahema Educao i.e., Bahema Educao and Profarma Distribuidora go up and down completely randomly.

Pair Corralation between Bahema Educao and Profarma Distribuidora

Assuming the 90 days trading horizon Bahema Educao SA is expected to under-perform the Profarma Distribuidora. In addition to that, Bahema Educao is 1.82 times more volatile than Profarma Distribuidora de. It trades about -0.12 of its total potential returns per unit of risk. Profarma Distribuidora de is currently generating about 0.11 per unit of volatility. If you would invest  594.00  in Profarma Distribuidora de on September 13, 2024 and sell it today you would earn a total of  100.00  from holding Profarma Distribuidora de or generate 16.84% return on investment over 90 days.

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

Bahema Educao SA  vs.  Profarma Distribuidora de

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.

Profarma Distribuidora

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Profarma Distribuidora de are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Profarma Distribuidora unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bahema Educao and Profarma Distribuidora

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

The idea behind Bahema Educao SA and Profarma Distribuidora 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.