Correlation Between Excelsior Alimentos and Bombril SA

Can any of the company-specific risk be diversified away by investing in both Excelsior Alimentos and Bombril SA 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 Excelsior Alimentos and Bombril SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Excelsior Alimentos and Bombril SA

0.08

Correlation Coefficient

Excelsior Alimentos  Bombril SA

Significant diversification

The 3 months correlation between Excelsior and Bombril is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Excelsior Alimentos SA and Bombril SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombril SA and Excelsior Alimentos 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 Excelsior Alimentos SA are associated (or correlated) with Bombril SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombril SA has no effect on the direction of Excelsior Alimentos i.e., Excelsior Alimentos and Bombril SA go up and down completely randomly.

Pair Corralation between Excelsior Alimentos and Bombril SA

Assuming the 90 days trading horizon Excelsior Alimentos SA is expected to under-perform the Bombril SA. But the preferred stock apears to be less risky and, when comparing its historical volatility, Excelsior Alimentos SA is 11.55 times less risky than Bombril SA. The preferred stock trades about -0.02 of its potential returns per unit of risk. The Bombril SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  201.00  in Bombril SA on September 30, 2024 and sell it today you would lose (9.00) from holding Bombril SA or give up 4.48% of portfolio value over 90 days.

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

Excelsior Alimentos SA  vs.  Bombril SA

Excelsior Alimentos

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bombril SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bombril 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 Preferred 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.

Pair Trading with Excelsior Alimentos and Bombril SA

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

The idea behind Excelsior Alimentos SA and Bombril SA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.