Correlation Between Fundo De and Cable One

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

By analyzing existing cross correlation between Fundo de Investimento and Cable One, you can compare the effects of market volatilities on Fundo De and Cable One 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 Fundo De with a short position of Cable One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundo De and Cable One.

Diversification Opportunities for Fundo De and Cable One

-0.81

Correlation Coefficient

Fundo De  Cable One

Pay attention - limited upside

The 3 months correlation between Fundo and Cable is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fundo de Investimento and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One and Fundo De 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 Fundo de Investimento are associated (or correlated) with Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of Fundo De i.e., Fundo De and Cable One go up and down completely randomly.

Pair Corralation between Fundo De and Cable One

Assuming the 90 days trading horizon Fundo de Investimento is expected to under-perform the Cable One. But the fund apears to be less risky and, when comparing its historical volatility, Fundo de Investimento is 1.15 times less risky than Cable One. The fund trades about -0.2 of its potential returns per unit of risk. The Cable One is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  1,218  in Cable One on September 25, 2024 and sell it today you would lose (63.00) from holding Cable One or give up 5.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Fundo de Investimento  vs.  Cable One

Fundo de Investimento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo de Investimento has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Cable One

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cable One are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cable One sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fundo De and Cable One

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

The idea behind Fundo de Investimento and Cable One 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.