Correlation Between Companhia Tecidos and Dhler SA

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

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

Diversification Opportunities for Companhia Tecidos and Dhler SA

0.08

Correlation Coefficient

Companhia Tecidos  Dhler SA

Significant diversification

The 3 months correlation between Companhia and Dhler is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Tecidos Santanense and Dhler SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dhler SA and Companhia Tecidos 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 Tecidos Santanense are associated (or correlated) with Dhler SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dhler SA has no effect on the direction of Companhia Tecidos i.e., Companhia Tecidos and Dhler SA go up and down completely randomly.

Pair Corralation between Companhia Tecidos and Dhler SA

Assuming the 90 days trading horizon Companhia Tecidos Santanense is expected to generate 2.6 times more return on investment than Dhler SA. However, Companhia Tecidos is 2.6 times more volatile than Dhler SA. It trades about 0.0 of its potential returns per unit of risk. Dhler SA is currently generating about -0.02 per unit of risk. If you would invest  80.00  in Companhia Tecidos Santanense on December 29, 2024 and sell it today you would lose (7.00) from holding Companhia Tecidos Santanense or give up 8.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Companhia Tecidos Santanense  vs.  Dhler SA

Companhia Tecidos

Risk-Adjusted Performance

Very Weak

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

Dhler SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dhler SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dhler SA 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 Tecidos and Dhler SA

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

The idea behind Companhia Tecidos Santanense and Dhler 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.