Correlation Between CTT Correios and Benfica

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

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

Diversification Opportunities for CTT Correios and Benfica

0.16

Correlation Coefficient

CTT Correios  Benfica

Average diversification

The 3 months correlation between CTT and Benfica is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding CTT Correios de and Benfica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benfica and CTT Correios 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 CTT Correios de are associated (or correlated) with Benfica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benfica has no effect on the direction of CTT Correios i.e., CTT Correios and Benfica go up and down completely randomly.

Pair Corralation between CTT Correios and Benfica

Assuming the 90 days trading horizon CTT Correios de is expected to generate 0.82 times more return on investment than Benfica. However, CTT Correios de is 1.22 times less risky than Benfica. It trades about 0.42 of its potential returns per unit of risk. Benfica is currently generating about 0.01 per unit of risk. If you would invest  523.00  in CTT Correios de on December 27, 2024 and sell it today you would earn a total of  235.00  from holding CTT Correios de or generate 44.93% return on investment over 90 days.

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

CTT Correios de  vs.  Benfica

CTT Correios de

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CTT Correios de are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CTT Correios unveiled solid returns over the last few months and may actually be approaching a breakup point.

Benfica

Risk-Adjusted Performance

Very Weak

Over the last 90 days Benfica has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Benfica is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with CTT Correios and Benfica

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

The idea behind CTT Correios de and Benfica 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.