Correlation Between Banco Alfa and Monteiro Aranha

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

By analyzing existing cross correlation between Banco Alfa de and Monteiro Aranha SA, you can compare the effects of market volatilities on Banco Alfa and Monteiro Aranha 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 Alfa with a short position of Monteiro Aranha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Alfa and Monteiro Aranha.

Diversification Opportunities for Banco Alfa and Monteiro Aranha

0.0

Correlation Coefficient

Banco Alfa  Monteiro Aranha

Pay attention - limited upside

The 3 months correlation between Banco and Monteiro is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Banco Alfa de and Monteiro Aranha SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monteiro Aranha SA and Banco Alfa 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 Alfa de are associated (or correlated) with Monteiro Aranha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monteiro Aranha SA has no effect on the direction of Banco Alfa i.e., Banco Alfa and Monteiro Aranha go up and down completely randomly.

Pair Corralation between Banco Alfa and Monteiro Aranha

If you would invest  39,951  in Monteiro Aranha SA on October 26, 2024 and sell it today you would earn a total of  49.00  from holding Monteiro Aranha SA or generate 0.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Banco Alfa de  vs.  Monteiro Aranha SA

Banco Alfa de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Alfa de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Banco Alfa is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Monteiro Aranha SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monteiro Aranha SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Monteiro Aranha is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Banco Alfa and Monteiro Aranha

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

The idea behind Banco Alfa de and Monteiro Aranha SA 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.