Correlation Between BTG Pactual and Hrcules SA

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

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

Diversification Opportunities for BTG Pactual and Hrcules SA

0.16

Correlation Coefficient

BTG Pactual  Hrcules SA

Average diversification

The 3 months correlation between BTG and Hrcules is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding BTG Pactual Logstica and Hrcules SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hrcules SA and BTG Pactual 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 BTG Pactual Logstica are associated (or correlated) with Hrcules SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hrcules SA has no effect on the direction of BTG Pactual i.e., BTG Pactual and Hrcules SA go up and down completely randomly.

Pair Corralation between BTG Pactual and Hrcules SA

Assuming the 90 days trading horizon BTG Pactual Logstica is expected to under-perform the Hrcules SA. But the fund apears to be less risky and, when comparing its historical volatility, BTG Pactual Logstica is 1.73 times less risky than Hrcules SA. The fund trades about -0.15 of its potential returns per unit of risk. The Hrcules SA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  645.00  in Hrcules SA on September 16, 2024 and sell it today you would lose (15.00) from holding Hrcules SA or give up 2.33% of portfolio value over 90 days.

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

BTG Pactual Logstica  vs.  Hrcules SA

BTG Pactual Logstica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BTG Pactual Logstica has generated negative risk-adjusted returns adding no value to fund investors. Despite latest uncertain performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Hrcules SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hrcules SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hrcules SA 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 BTG Pactual and Hrcules SA

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

The idea behind BTG Pactual Logstica and Hrcules 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.