Correlation Between Bombril SA and Triunfo Participaes

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

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

Diversification Opportunities for Bombril SA and Triunfo Participaes

0.79

Correlation Coefficient

Bombril SA  Triunfo Participaes

Poor diversification

The 3 months correlation between Bombril and Triunfo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bombril SA and Triunfo Participaes e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triunfo Participaes 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 Triunfo Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triunfo Participaes has no effect on the direction of Bombril SA i.e., Bombril SA and Triunfo Participaes go up and down completely randomly.

Pair Corralation between Bombril SA and Triunfo Participaes

Assuming the 90 days trading horizon Bombril SA is expected to generate 6.43 times less return on investment than Triunfo Participaes. But when comparing it to its historical volatility, Bombril SA is 1.15 times less risky than Triunfo Participaes. It trades about 0.03 of its potential returns per unit of risk. Triunfo Participaes e is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  456.00  in Triunfo Participaes e on September 2, 2024 and sell it today you would earn a total of  194.00  from holding Triunfo Participaes e or generate 42.54% 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.  Triunfo Participaes e

Bombril SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bombril SA are ranked lower than 2 (%) 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.

Triunfo Participaes

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Triunfo Participaes e are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Triunfo Participaes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bombril SA and Triunfo Participaes

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

The idea behind Bombril SA and Triunfo Participaes e 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.