Correlation Between GRUPUL INDUSTRIAL and Patria Bank

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

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

Diversification Opportunities for GRUPUL INDUSTRIAL and Patria Bank

0.77

Correlation Coefficient

GRUPUL INDUSTRIAL  Patria Bank

Poor diversification

The 3 months correlation between GRUPUL and Patria is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding GRUPUL INDUSTRIAL ELECTROCONTA and Patria Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Bank SA and GRUPUL INDUSTRIAL 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 GRUPUL INDUSTRIAL ELECTROCONTACT are associated (or correlated) with Patria Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Bank SA has no effect on the direction of GRUPUL INDUSTRIAL i.e., GRUPUL INDUSTRIAL and Patria Bank go up and down completely randomly.

Pair Corralation between GRUPUL INDUSTRIAL and Patria Bank

Assuming the 90 days trading horizon GRUPUL INDUSTRIAL is expected to generate 4.44 times less return on investment than Patria Bank. In addition to that, GRUPUL INDUSTRIAL is 2.08 times more volatile than Patria Bank SA. It trades about 0.0 of its total potential returns per unit of risk. Patria Bank SA is currently generating about 0.01 per unit of volatility. If you would invest  8.10  in Patria Bank SA on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Patria Bank SA or generate 0.0% return on investment over 90 days.

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

GRUPUL INDUSTRIAL ELECTROCONTA  vs.  Patria Bank SA

GRUPUL INDUSTRIAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRUPUL INDUSTRIAL ELECTROCONTACT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, GRUPUL INDUSTRIAL is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Patria Bank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Patria Bank SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Patria Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GRUPUL INDUSTRIAL and Patria Bank

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

The idea behind GRUPUL INDUSTRIAL ELECTROCONTACT and Patria Bank 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.