Correlation Between Companhia and Inepar SA

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

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

Diversification Opportunities for Companhia and Inepar SA

-0.31

Correlation Coefficient

Companhia  Inepar SA

Very good diversification

The 3 months correlation between Companhia and Inepar is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Companhia de Gs and Inepar SA Indstria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inepar SA Indstria and Companhia 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 de Gs are associated (or correlated) with Inepar SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inepar SA Indstria has no effect on the direction of Companhia i.e., Companhia and Inepar SA go up and down completely randomly.

Pair Corralation between Companhia and Inepar SA

Assuming the 90 days trading horizon Companhia de Gs is expected to generate 0.49 times more return on investment than Inepar SA. However, Companhia de Gs is 2.04 times less risky than Inepar SA. It trades about 0.03 of its potential returns per unit of risk. Inepar SA Indstria is currently generating about -0.09 per unit of risk. If you would invest  12,163  in Companhia de Gs on October 10, 2024 and sell it today you would earn a total of  239.00  from holding Companhia de Gs or generate 1.96% return on investment over 90 days.

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

Companhia de Gs  vs.  Inepar SA Indstria

Companhia de Gs

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia de Gs are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Companhia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Inepar SA Indstria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inepar SA Indstria has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Companhia and Inepar SA

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

The idea behind Companhia de Gs and Inepar SA Indstria 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.