Correlation Between BB Seguridade and Alupar Investimento
Can any of the company-specific risk be diversified away by investing in both BB Seguridade and Alupar Investimento 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 BB Seguridade and Alupar Investimento into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BB Seguridade Participacoes and Alupar Investimento SA, you can compare the effects of market volatilities on BB Seguridade and Alupar Investimento 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 BB Seguridade with a short position of Alupar Investimento. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Seguridade and Alupar Investimento.
Diversification Opportunities for BB Seguridade and Alupar Investimento
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BBSE3 and Alupar is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes and Alupar Investimento SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alupar Investimento and BB Seguridade 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 BB Seguridade Participacoes are associated (or correlated) with Alupar Investimento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alupar Investimento has no effect on the direction of BB Seguridade i.e., BB Seguridade and Alupar Investimento go up and down completely randomly.
Pair Corralation between BB Seguridade and Alupar Investimento
Assuming the 90 days trading horizon BB Seguridade Participacoes is expected to generate 0.89 times more return on investment than Alupar Investimento. However, BB Seguridade Participacoes is 1.12 times less risky than Alupar Investimento. It trades about -0.08 of its potential returns per unit of risk. Alupar Investimento SA is currently generating about -0.21 per unit of risk. If you would invest 3,695 in BB Seguridade Participacoes on September 5, 2024 and sell it today you would lose (195.00) from holding BB Seguridade Participacoes or give up 5.28% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
BB Seguridade Participacoes vs. Alupar Investimento SA
Performance |
Timeline |
BB Seguridade Partic |
Alupar Investimento |
BB Seguridade and Alupar Investimento Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BB Seguridade and Alupar Investimento
The main advantage of trading using opposite BB Seguridade and Alupar Investimento positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Seguridade position performs unexpectedly, Alupar Investimento 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 Alupar Investimento will offset losses from the drop in Alupar Investimento's long position.BB Seguridade vs. WEG SA | BB Seguridade vs. Engie Brasil Energia | BB Seguridade vs. Vale SA | BB Seguridade vs. Magazine Luiza SA |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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