Correlation Between Companhia Brasileira and El Puerto

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

By analyzing existing cross correlation between Companhia Brasileira de and El Puerto de, you can compare the effects of market volatilities on Companhia Brasileira and El Puerto 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 Companhia Brasileira with a short position of El Puerto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Brasileira and El Puerto.

Diversification Opportunities for Companhia Brasileira and El Puerto

0.0

Correlation Coefficient

Companhia Brasileira  El Puerto

Pay attention - limited upside

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

Pair Corralation between Companhia Brasileira and El Puerto

If you would invest  1,360  in Companhia Brasileira de on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Companhia Brasileira de or generate 0.0% return on investment over 90 days.

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

Companhia Brasileira de  vs.  El Puerto de

Companhia Brasileira

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Companhia Brasileira de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Companhia Brasileira is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

El Puerto de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days El Puerto de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Companhia Brasileira and El Puerto

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

The idea behind Companhia Brasileira de and El Puerto de 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.

Check out your portfolio center.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.