Correlation Between Banco BTG and Habitat Ii

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

By analyzing existing cross correlation between Banco BTG Pactual and Habitat Ii , you can compare the effects of market volatilities on Banco BTG and Habitat Ii 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 Banco BTG with a short position of Habitat Ii. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco BTG and Habitat Ii.

Diversification Opportunities for Banco BTG and Habitat Ii

0.29

Correlation Coefficient

Banco BTG  Habitat Ii

Modest diversification

The 3 months correlation between Banco and Habitat is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Banco BTG Pactual and Habitat Ii in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habitat Ii and Banco BTG 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 Banco BTG Pactual are associated (or correlated) with Habitat Ii. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habitat Ii has no effect on the direction of Banco BTG i.e., Banco BTG and Habitat Ii go up and down completely randomly.

Pair Corralation between Banco BTG and Habitat Ii

Assuming the 90 days trading horizon Banco BTG is expected to generate 1.24 times less return on investment than Habitat Ii. In addition to that, Banco BTG is 1.53 times more volatile than Habitat Ii . It trades about 0.02 of its total potential returns per unit of risk. Habitat Ii is currently generating about 0.04 per unit of volatility. If you would invest  7,379  in Habitat Ii on November 29, 2024 and sell it today you would earn a total of  221.00  from holding Habitat Ii or generate 2.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Banco BTG Pactual  vs.  Habitat Ii

Banco BTG Pactual

Risk-Adjusted Performance

Weak

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

Habitat Ii

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Habitat Ii are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong fundamental drivers, Habitat Ii is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Banco BTG and Habitat Ii

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

The idea behind Banco BTG Pactual and Habitat Ii 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.