Correlation Between Hugo Boss and Companhia

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

By analyzing existing cross correlation between Hugo Boss AG and Companhia de Saneamento, you can compare the effects of market volatilities on Hugo Boss and Companhia 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 Hugo Boss with a short position of Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hugo Boss and Companhia.

Diversification Opportunities for Hugo Boss and Companhia

-0.44

Correlation Coefficient

Hugo Boss  Companhia

Very good diversification

The 3 months correlation between Hugo and Companhia is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hugo Boss AG and Companhia de Saneamento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Saneamento and Hugo Boss 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 Hugo Boss AG are associated (or correlated) with Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Saneamento has no effect on the direction of Hugo Boss i.e., Hugo Boss and Companhia go up and down completely randomly.

Pair Corralation between Hugo Boss and Companhia

Assuming the 90 days trading horizon Hugo Boss AG is expected to under-perform the Companhia. In addition to that, Hugo Boss is 1.05 times more volatile than Companhia de Saneamento. It trades about -0.01 of its total potential returns per unit of risk. Companhia de Saneamento is currently generating about 0.05 per unit of volatility. If you would invest  929.00  in Companhia de Saneamento on September 21, 2024 and sell it today you would earn a total of  401.00  from holding Companhia de Saneamento or generate 43.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Hugo Boss AG  vs.  Companhia de Saneamento

Hugo Boss AG

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hugo Boss AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Hugo Boss exhibited solid returns over the last few months and may actually be approaching a breakup point.

Companhia de Saneamento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia de Saneamento has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hugo Boss and Companhia

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

The idea behind Hugo Boss AG and Companhia de Saneamento 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.