Correlation Between Elevance Health, and PagSeguro Digital

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

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

Diversification Opportunities for Elevance Health, and PagSeguro Digital

0.28

Correlation Coefficient

Elevance Health,  PagSeguro Digital

Modest diversification

The 3 months correlation between Elevance and PagSeguro is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Elevance Health, and PagSeguro Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PagSeguro Digital and Elevance Health, 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 Elevance Health, 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 Elevance Health, i.e., Elevance Health, and PagSeguro Digital go up and down completely randomly.

Pair Corralation between Elevance Health, and PagSeguro Digital

Assuming the 90 days trading horizon Elevance Health, is expected to under-perform the PagSeguro Digital. But the stock apears to be less risky and, when comparing its historical volatility, Elevance Health, is 1.56 times less risky than PagSeguro Digital. The stock trades about -0.12 of its potential returns per unit of risk. The PagSeguro Digital is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  898.00  in PagSeguro Digital on October 5, 2024 and sell it today you would lose (124.00) from holding PagSeguro Digital or give up 13.81% of portfolio value over 90 days.

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

Elevance Health,  vs.  PagSeguro Digital

Elevance Health,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elevance Health, 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 essential 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.

PagSeguro Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PagSeguro Digital 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 technical and fundamental 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 Elevance Health, and PagSeguro Digital

The main advantage of trading using opposite Elevance Health, and PagSeguro Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elevance Health, 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 Elevance Health, 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.