Correlation Between Turism Hotelur and Patria Bank

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

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

Diversification Opportunities for Turism Hotelur and Patria Bank

0.64

Correlation Coefficient

Turism Hotelur  Patria Bank

Poor diversification

The 3 months correlation between Turism and Patria is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Turism Hotelur 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 Turism Hotelur 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 Turism Hotelur 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 Turism Hotelur i.e., Turism Hotelur and Patria Bank go up and down completely randomly.

Pair Corralation between Turism Hotelur and Patria Bank

Assuming the 90 days trading horizon Turism Hotelur is expected to generate 1.57 times less return on investment than Patria Bank. In addition to that, Turism Hotelur is 2.59 times more volatile than Patria Bank SA. It trades about 0.01 of its total potential returns per unit of risk. Patria Bank SA is currently generating about 0.06 per unit of volatility. If you would invest  8.10  in Patria Bank SA on September 27, 2024 and sell it today you would earn a total of  0.10  from holding Patria Bank SA or generate 1.23% return on investment over 90 days.

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

Turism Hotelur  vs.  Patria Bank SA

Turism Hotelur

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Turism Hotelur are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Turism Hotelur may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Patria Bank SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Bank SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking signals, Patria Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Turism Hotelur and Patria Bank

The main advantage of trading using opposite Turism Hotelur and Patria Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turism Hotelur 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 Turism Hotelur 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.