Correlation Between Cogna Educacao and Vitru

Can any of the company-specific risk be diversified away by investing in both Cogna Educacao and Vitru 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 Vitru 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 Vitru, you can compare the effects of market volatilities on Cogna Educacao and Vitru 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 Vitru. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogna Educacao and Vitru.

Diversification Opportunities for Cogna Educacao and Vitru

0.0

Correlation Coefficient

Cogna Educacao  Vitru

Pay attention - limited upside

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

Pair Corralation between Cogna Educacao and Vitru

If you would invest  24.00  in Cogna Educacao SA on November 28, 2024 and sell it today you would earn a total of  0.00  from holding Cogna Educacao SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Cogna Educacao SA  vs.  Vitru

Cogna Educacao SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cogna Educacao SA are ranked lower than 3 (%) 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.

Vitru

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Cogna Educacao and Vitru

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

The idea behind Cogna Educacao SA and Vitru 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.