Correlation Between Cable One and Grendene

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

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

Diversification Opportunities for Cable One and Grendene

-0.13

Correlation Coefficient

Cable One  Grendene

Good diversification

The 3 months correlation between Cable and Grendene is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and Grendene SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grendene SA and Cable One 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 Cable One are associated (or correlated) with Grendene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grendene SA has no effect on the direction of Cable One i.e., Cable One and Grendene go up and down completely randomly.

Pair Corralation between Cable One and Grendene

Assuming the 90 days trading horizon Cable One is expected to under-perform the Grendene. In addition to that, Cable One is 1.5 times more volatile than Grendene SA. It trades about -0.03 of its total potential returns per unit of risk. Grendene SA is currently generating about 0.02 per unit of volatility. If you would invest  475.00  in Grendene SA on September 23, 2024 and sell it today you would earn a total of  30.00  from holding Grendene SA or generate 6.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.93%
Values	Daily Returns

Cable One  vs.  Grendene SA

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.

Grendene SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grendene SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Cable One and Grendene

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

The idea behind Cable One and Grendene 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.