Correlation Between Berkshire Hathaway and Cia Brasileira

Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Cia Brasileira 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 Berkshire Hathaway and Cia Brasileira into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Berkshire Hathaway and Cia Brasileira de, you can compare the effects of market volatilities on Berkshire Hathaway and Cia Brasileira 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 Berkshire Hathaway with a short position of Cia Brasileira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Cia Brasileira.

Diversification Opportunities for Berkshire Hathaway and Cia Brasileira

-0.18

Correlation Coefficient

Berkshire Hathaway  Cia Brasileira

Good diversification

The 3 months correlation between Berkshire and Cia is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Cia Brasileira de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cia Brasileira de and Berkshire Hathaway 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 Berkshire Hathaway are associated (or correlated) with Cia Brasileira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cia Brasileira de has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Cia Brasileira go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Cia Brasileira

Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 0.51 times more return on investment than Cia Brasileira. However, Berkshire Hathaway is 1.96 times less risky than Cia Brasileira. It trades about 0.09 of its potential returns per unit of risk. Cia Brasileira de is currently generating about 0.03 per unit of risk. If you would invest  14,030  in Berkshire Hathaway on December 29, 2024 and sell it today you would earn a total of  1,120  from holding Berkshire Hathaway or generate 7.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Berkshire Hathaway  vs.  Cia Brasileira de

Berkshire Hathaway

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Berkshire Hathaway may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cia Brasileira de

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cia Brasileira de are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cia Brasileira may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Berkshire Hathaway and Cia Brasileira

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

The idea behind Berkshire Hathaway and Cia Brasileira de 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.