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
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bombril and Ouro is 0.41. 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 1.72 times more volatile than Ouro Fino Sade. It trades about -0.09 of its total potential returns per unit of risk. Ouro Fino Sade is currently generating about -0.08 per unit of volatility. If you would invest 2,061 in Ouro Fino Sade on December 4, 2024 and sell it today you would lose (281.00) from holding Ouro Fino Sade or give up 13.63% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bombril SA vs. Ouro Fino Sade
Performance |
Timeline |
Bombril SA |
Ouro Fino Sade |
Bombril SA and Ouro Fino Volatility Contrast
Predicted Return Density |
Returns |
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.Bombril SA vs. Eternit SA | Bombril SA vs. Lupatech SA | Bombril SA vs. Inepar SA Indstria | Bombril SA vs. Marcopolo SA |
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Check out your portfolio center.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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