Correlation Between BB Seguridade and Qualicorp Consultoria

Can any of the company-specific risk be diversified away by investing in both BB Seguridade and Qualicorp Consultoria 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 Qualicorp Consultoria 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 Qualicorp Consultoria e, you can compare the effects of market volatilities on BB Seguridade and Qualicorp Consultoria 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 Qualicorp Consultoria. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Seguridade and Qualicorp Consultoria.

Diversification Opportunities for BB Seguridade and Qualicorp Consultoria

-0.24

Correlation Coefficient

BB Seguridade  Qualicorp Consultoria

Very good diversification

The 3 months correlation between BBSE3 and Qualicorp is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes and Qualicorp Consultoria e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualicorp Consultoria 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 Qualicorp Consultoria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualicorp Consultoria has no effect on the direction of BB Seguridade i.e., BB Seguridade and Qualicorp Consultoria go up and down completely randomly.

Pair Corralation between BB Seguridade and Qualicorp Consultoria

Assuming the 90 days trading horizon BB Seguridade Participacoes is expected to under-perform the Qualicorp Consultoria. But the stock apears to be less risky and, when comparing its historical volatility, BB Seguridade Participacoes is 6.69 times less risky than Qualicorp Consultoria. The stock trades about -0.21 of its potential returns per unit of risk. The Qualicorp Consultoria e is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  220.00  in Qualicorp Consultoria e on September 4, 2024 and sell it today you would earn a total of  16.00  from holding Qualicorp Consultoria e or generate 7.27% return on investment over 90 days.

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

BB Seguridade Participacoes  vs.  Qualicorp Consultoria e

BB Seguridade Partic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BB Seguridade Participacoes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Qualicorp Consultoria

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Qualicorp Consultoria e are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Qualicorp Consultoria unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BB Seguridade and Qualicorp Consultoria

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

The idea behind BB Seguridade Participacoes and Qualicorp Consultoria e 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.