Correlation Between Bombril SA and HAGA SA

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

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

Diversification Opportunities for Bombril SA and HAGA SA

0.73

Correlation Coefficient

Bombril SA  HAGA SA

Poor diversification

The 3 months correlation between Bombril and HAGA is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bombril SA and HAGA SA Indstria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAGA SA Indstria and Bombril SA 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 Bombril SA are associated (or correlated) with HAGA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAGA SA Indstria has no effect on the direction of Bombril SA i.e., Bombril SA and HAGA SA go up and down completely randomly.

Pair Corralation between Bombril SA and HAGA SA

Assuming the 90 days trading horizon Bombril SA is expected to generate 1.77 times less return on investment than HAGA SA. In addition to that, Bombril SA is 1.9 times more volatile than HAGA SA Indstria. It trades about 0.02 of its total potential returns per unit of risk. HAGA SA Indstria is currently generating about 0.07 per unit of volatility. If you would invest  118.00  in HAGA SA Indstria on September 3, 2024 and sell it today you would earn a total of  7.00  from holding HAGA SA Indstria or generate 5.93% return on investment over 90 days.

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

Bombril SA  vs.  HAGA SA Indstria

Bombril SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bombril SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bombril SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

HAGA SA Indstria

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HAGA SA Indstria are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HAGA SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bombril SA and HAGA SA

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

The idea behind Bombril SA and HAGA SA Indstria 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.