Correlation Between Financeira Alfa and SIMPAR SA

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

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

Diversification Opportunities for Financeira Alfa and SIMPAR SA

0.0

Correlation Coefficient

Financeira Alfa  SIMPAR SA

Pay attention - limited upside

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

Pair Corralation between Financeira Alfa and SIMPAR SA

If you would invest  698.00  in Financeira Alfa SA on September 29, 2024 and sell it today you would earn a total of  0.00  from holding Financeira Alfa SA or generate 0.0% return on investment over 90 days.

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

Financeira Alfa SA  vs.  SIMPAR SA

Financeira Alfa SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

SIMPAR SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMPAR SA 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 basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Financeira Alfa and SIMPAR SA

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

The idea behind Financeira Alfa SA and SIMPAR 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.