Correlation Between China Jo and Raia Drogasil

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

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

Diversification Opportunities for China Jo and Raia Drogasil

0.4

Correlation Coefficient

China Jo  Raia Drogasil

Very weak diversification

The 3 months correlation between China and Raia is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding China Jo Jo Drugstores and Raia Drogasil SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raia Drogasil SA and China Jo 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 China Jo Jo Drugstores are associated (or correlated) with Raia Drogasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raia Drogasil SA has no effect on the direction of China Jo i.e., China Jo and Raia Drogasil go up and down completely randomly.

Pair Corralation between China Jo and Raia Drogasil

Given the investment horizon of 90 days China Jo Jo Drugstores is expected to under-perform the Raia Drogasil. In addition to that, China Jo is 1.53 times more volatile than Raia Drogasil SA. It trades about -0.05 of its total potential returns per unit of risk. Raia Drogasil SA is currently generating about -0.01 per unit of volatility. If you would invest  355.00  in Raia Drogasil SA on December 27, 2024 and sell it today you would lose (25.00) from holding Raia Drogasil SA or give up 7.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	73.77%
Values	Daily Returns

China Jo Jo Drugstores  vs.  Raia Drogasil SA

China Jo Jo

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Jo Jo Drugstores 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 Stock's forward-looking indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Raia Drogasil SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with China Jo and Raia Drogasil

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

The idea behind China Jo Jo Drugstores and Raia Drogasil 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.