Correlation Between Dhler SA and Companhia

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

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

Diversification Opportunities for Dhler SA and Companhia

-0.22

Correlation Coefficient

Dhler SA  Companhia

Very good diversification

The 3 months correlation between Dhler and Companhia is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Dhler SA and Companhia de Fiacao in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Fiacao and Dhler SA 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 Dhler SA are associated (or correlated) with Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Fiacao has no effect on the direction of Dhler SA i.e., Dhler SA and Companhia go up and down completely randomly.

Pair Corralation between Dhler SA and Companhia

Assuming the 90 days trading horizon Dhler SA is expected to generate 0.78 times more return on investment than Companhia. However, Dhler SA is 1.29 times less risky than Companhia. It trades about -0.02 of its potential returns per unit of risk. Companhia de Fiacao is currently generating about -0.07 per unit of risk. If you would invest  406.00  in Dhler SA on December 29, 2024 and sell it today you would lose (12.00) from holding Dhler SA or give up 2.96% of portfolio value over 90 days.

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

Dhler SA  vs.  Companhia de Fiacao

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.

Companhia de Fiacao

Risk-Adjusted Performance

Very Weak

Over the last 90 days Companhia de Fiacao has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Dhler SA and Companhia

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

The idea behind Dhler SA and Companhia de Fiacao 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.