Correlation Between Brait SE and Zeder Investments

Can any of the company-specific risk be diversified away by investing in both Brait SE and Zeder Investments 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 Brait SE and Zeder Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Brait SE and Zeder Investments

-0.67

Correlation Coefficient

Brait SE  Zeder Investments

Excellent diversification

The 3 months correlation between Brait and Zeder is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Brait SE and Zeder Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zeder Investments and Brait SE 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 Brait SE are associated (or correlated) with Zeder Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zeder Investments has no effect on the direction of Brait SE i.e., Brait SE and Zeder Investments go up and down completely randomly.

Pair Corralation between Brait SE and Zeder Investments

Assuming the 90 days trading horizon Brait SE is expected to under-perform the Zeder Investments. In addition to that, Brait SE is 1.24 times more volatile than Zeder Investments. It trades about -0.02 of its total potential returns per unit of risk. Zeder Investments is currently generating about 0.01 per unit of volatility. If you would invest  17,500  in Zeder Investments on October 12, 2024 and sell it today you would lose (1,300) from holding Zeder Investments or give up 7.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Brait SE  vs.  Zeder Investments

Brait SE

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brait SE are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Brait SE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Zeder Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zeder Investments 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Brait SE and Zeder Investments

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

The idea behind Brait SE and Zeder Investments 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.