Correlation Between Cogna Educacao and Graham Holdings

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

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

Diversification Opportunities for Cogna Educacao and Graham Holdings

0.82

Correlation Coefficient

Cogna Educacao  Graham Holdings

Very poor diversification

The 3 months correlation between Cogna and Graham is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cogna Educacao SA and Graham Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham Holdings and Cogna Educacao 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 Cogna Educacao SA are associated (or correlated) with Graham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham Holdings has no effect on the direction of Cogna Educacao i.e., Cogna Educacao and Graham Holdings go up and down completely randomly.

Pair Corralation between Cogna Educacao and Graham Holdings

Assuming the 90 days horizon Cogna Educacao SA is expected to generate 5.81 times more return on investment than Graham Holdings. However, Cogna Educacao is 5.81 times more volatile than Graham Holdings Co. It trades about 0.12 of its potential returns per unit of risk. Graham Holdings Co is currently generating about 0.13 per unit of risk. If you would invest  19.00  in Cogna Educacao SA on December 28, 2024 and sell it today you would earn a total of  10.00  from holding Cogna Educacao SA or generate 52.63% return on investment over 90 days.

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

Cogna Educacao SA  vs.  Graham Holdings Co

Cogna Educacao SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cogna Educacao SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Cogna Educacao showed solid returns over the last few months and may actually be approaching a breakup point.

Graham Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Graham Holdings Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Graham Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cogna Educacao and Graham Holdings

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

The idea behind Cogna Educacao SA and Graham Holdings Co 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.