Correlation Between Endava and PagSeguro Digital

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

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

Diversification Opportunities for Endava and PagSeguro Digital

-0.48

Correlation Coefficient

Endava  PagSeguro Digital

Very good diversification

The 3 months correlation between Endava and PagSeguro is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Endava and PagSeguro Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PagSeguro Digital and Endava 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 Endava are associated (or correlated) with PagSeguro Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PagSeguro Digital has no effect on the direction of Endava i.e., Endava and PagSeguro Digital go up and down completely randomly.

Pair Corralation between Endava and PagSeguro Digital

Given the investment horizon of 90 days Endava is expected to under-perform the PagSeguro Digital. But the stock apears to be less risky and, when comparing its historical volatility, Endava is 1.25 times less risky than PagSeguro Digital. The stock trades about -0.28 of its potential returns per unit of risk. The PagSeguro Digital is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  619.00  in PagSeguro Digital on December 29, 2024 and sell it today you would earn a total of  174.00  from holding PagSeguro Digital or generate 28.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Endava  vs.  PagSeguro Digital

Endava

Risk-Adjusted Performance

Very Weak

Over the last 90 days Endava has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

PagSeguro Digital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PagSeguro Digital are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, PagSeguro Digital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Endava and PagSeguro Digital

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

The idea behind Endava and PagSeguro Digital 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 CEOs Directory module to screen CEOs from public companies around the world.