Correlation Between Cruzeiro and Yduqs Participaes

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

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

Diversification Opportunities for Cruzeiro and Yduqs Participaes

0.61

Correlation Coefficient

Cruzeiro  Yduqs Participaes

Poor diversification

The 3 months correlation between Cruzeiro and Yduqs is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Cruzeiro do Sul and Yduqs Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yduqs Participaes and Cruzeiro 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 Cruzeiro do Sul are associated (or correlated) with Yduqs Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yduqs Participaes has no effect on the direction of Cruzeiro i.e., Cruzeiro and Yduqs Participaes go up and down completely randomly.

Pair Corralation between Cruzeiro and Yduqs Participaes

Assuming the 90 days trading horizon Cruzeiro do Sul is expected to generate 1.36 times more return on investment than Yduqs Participaes. However, Cruzeiro is 1.36 times more volatile than Yduqs Participaes SA. It trades about 0.01 of its potential returns per unit of risk. Yduqs Participaes SA is currently generating about -0.13 per unit of risk. If you would invest  315.00  in Cruzeiro do Sul on September 29, 2024 and sell it today you would lose (4.00) from holding Cruzeiro do Sul or give up 1.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Cruzeiro do Sul  vs.  Yduqs Participaes SA

Cruzeiro do Sul

Risk-Adjusted Performance

0 of 100

Very Weak

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

Yduqs Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cruzeiro and Yduqs Participaes

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

The idea behind Cruzeiro do Sul and Yduqs Participaes 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.