Correlation Between Dycasa SA and Vale SA

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

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

Diversification Opportunities for Dycasa SA and Vale SA

-0.95

Correlation Coefficient

Dycasa SA  Vale SA

Pay attention - limited upside

The 3 months correlation between Dycasa and Vale is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dycasa SA and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA and Dycasa 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 Dycasa SA are associated (or correlated) with Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of Dycasa SA i.e., Dycasa SA and Vale SA go up and down completely randomly.

Pair Corralation between Dycasa SA and Vale SA

Assuming the 90 days trading horizon Dycasa SA is expected to generate 1.95 times more return on investment than Vale SA. However, Dycasa SA is 1.95 times more volatile than Vale SA. It trades about 0.12 of its potential returns per unit of risk. Vale SA is currently generating about 0.05 per unit of risk. If you would invest  10,800  in Dycasa SA on October 11, 2024 and sell it today you would earn a total of  99,700  from holding Dycasa SA or generate 923.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Dycasa SA  vs.  Vale SA

Dycasa SA

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dycasa SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dycasa SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Vale SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vale SA 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dycasa SA and Vale SA

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

The idea behind Dycasa SA and Vale 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.