Correlation Between Civeo Corp and StoneCo

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

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

Diversification Opportunities for Civeo Corp and StoneCo

0.86

Correlation Coefficient

Civeo Corp  StoneCo

Very poor diversification

The 3 months correlation between Civeo and StoneCo is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Civeo Corp and StoneCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StoneCo and Civeo Corp 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 Civeo Corp are associated (or correlated) with StoneCo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StoneCo has no effect on the direction of Civeo Corp i.e., Civeo Corp and StoneCo go up and down completely randomly.

Pair Corralation between Civeo Corp and StoneCo

Given the investment horizon of 90 days Civeo Corp is expected to generate 0.49 times more return on investment than StoneCo. However, Civeo Corp is 2.03 times less risky than StoneCo. It trades about -0.38 of its potential returns per unit of risk. StoneCo is currently generating about -0.5 per unit of risk. If you would invest  2,394  in Civeo Corp on September 25, 2024 and sell it today you would lose (251.00) from holding Civeo Corp or give up 10.48% of portfolio value over 90 days.

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

Civeo Corp  vs.  StoneCo

Civeo Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Civeo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

StoneCo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StoneCo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Civeo Corp and StoneCo

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

The idea behind Civeo Corp and StoneCo 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.