Correlation Between Companhia and Teka Tecelagem

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

By analyzing existing cross correlation between Companhia de Tecidos and Teka Tecelagem Kuehnrich, you can compare the effects of market volatilities on Companhia and Teka Tecelagem 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 Companhia with a short position of Teka Tecelagem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia and Teka Tecelagem.

Diversification Opportunities for Companhia and Teka Tecelagem

0.0

Correlation Coefficient

Companhia  Teka Tecelagem

Pay attention - limited upside

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

Pair Corralation between Companhia and Teka Tecelagem

Assuming the 90 days trading horizon Companhia de Tecidos is expected to under-perform the Teka Tecelagem. But the stock apears to be less risky and, when comparing its historical volatility, Companhia de Tecidos is 3.0 times less risky than Teka Tecelagem. The stock trades about -0.18 of its potential returns per unit of risk. The Teka Tecelagem Kuehnrich is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,090  in Teka Tecelagem Kuehnrich on September 27, 2024 and sell it today you would lose (190.00) from holding Teka Tecelagem Kuehnrich or give up 6.15% of portfolio value over 90 days.

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

Companhia de Tecidos  vs.  Teka Tecelagem Kuehnrich

Companhia de Tecidos

Risk-Adjusted Performance

0 of 100

Very Weak

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

Teka Tecelagem Kuehnrich

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Teka Tecelagem Kuehnrich are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Teka Tecelagem is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Companhia and Teka Tecelagem

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

The idea behind Companhia de Tecidos and Teka Tecelagem Kuehnrich 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.