Correlation Between BB Seguridade and Baloise Holding

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

Diversification Opportunities for BB Seguridade and Baloise Holding

0.47

Correlation Coefficient

BB Seguridade  Baloise Holding

Very weak diversification

The 3 months correlation between BBSEY and Baloise is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes and Baloise Holding Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baloise Holding 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 Baloise Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baloise Holding has no effect on the direction of BB Seguridade i.e., BB Seguridade and Baloise Holding go up and down completely randomly.

Pair Corralation between BB Seguridade and Baloise Holding

Assuming the 90 days horizon BB Seguridade Participacoes is expected to generate 1.55 times more return on investment than Baloise Holding. However, BB Seguridade is 1.55 times more volatile than Baloise Holding Ltd. It trades about 0.26 of its potential returns per unit of risk. Baloise Holding Ltd is currently generating about 0.13 per unit of risk. If you would invest  544.00  in BB Seguridade Participacoes on December 28, 2024 and sell it today you would earn a total of  157.00  from holding BB Seguridade Participacoes or generate 28.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

BB Seguridade Participacoes  vs.  Baloise Holding Ltd

BB Seguridade Partic

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BB Seguridade Participacoes are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, BB Seguridade showed solid returns over the last few months and may actually be approaching a breakup point.

Baloise Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baloise Holding Ltd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Baloise Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BB Seguridade and Baloise Holding

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

The idea behind BB Seguridade Participacoes and Baloise Holding Ltd 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 Transaction History module to view history of all your transactions and understand their impact on performance.