Correlation Between Bombril SA and Ouro Fino

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

By analyzing existing cross correlation between Bombril SA and Ouro Fino Sade, you can compare the effects of market volatilities on Bombril SA and Ouro Fino 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 Ouro Fino. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bombril SA and Ouro Fino.

Diversification Opportunities for Bombril SA and Ouro Fino

-0.27

Correlation Coefficient

Bombril SA  Ouro Fino

Very good diversification

The 3 months correlation between Bombril and Ouro is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bombril SA and Ouro Fino Sade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ouro Fino Sade 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 Ouro Fino. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ouro Fino Sade has no effect on the direction of Bombril SA i.e., Bombril SA and Ouro Fino go up and down completely randomly.

Pair Corralation between Bombril SA and Ouro Fino

Assuming the 90 days trading horizon Bombril SA is expected to under-perform the Ouro Fino. In addition to that, Bombril SA is 1.85 times more volatile than Ouro Fino Sade. It trades about 0.0 of its total potential returns per unit of risk. Ouro Fino Sade is currently generating about 0.09 per unit of volatility. If you would invest  1,935  in Ouro Fino Sade on December 30, 2024 and sell it today you would earn a total of  265.00  from holding Ouro Fino Sade or generate 13.7% return on investment over 90 days.

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

Bombril SA  vs.  Ouro Fino Sade

Bombril SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bombril SA has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Ouro Fino Sade

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ouro Fino Sade are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Ouro Fino unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bombril SA and Ouro Fino

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

The idea behind Bombril SA and Ouro Fino Sade 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.