Correlation Between BTG Pactual and HMC SA

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

By analyzing existing cross correlation between BTG Pactual Chile and HMC SA ADMINISTRADORA, you can compare the effects of market volatilities on BTG Pactual and HMC 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 HMC SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTG Pactual and HMC SA.

Diversification Opportunities for BTG Pactual and HMC SA

0.0

Correlation Coefficient

BTG Pactual  HMC SA

Pay attention - limited upside

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

Pair Corralation between BTG Pactual and HMC SA

If you would invest  1,097,377  in BTG Pactual Chile on December 3, 2024 and sell it today you would earn a total of  202,623  from holding BTG Pactual Chile or generate 18.46% return on investment over 90 days.

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

BTG Pactual Chile  vs.  HMC SA ADMINISTRADORA

BTG Pactual Chile

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BTG Pactual Chile are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, BTG Pactual reported solid returns over the last few months and may actually be approaching a breakup point.

HMC SA ADMINISTRADORA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with BTG Pactual and HMC SA

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

The idea behind BTG Pactual Chile and HMC SA ADMINISTRADORA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.