Correlation Between Eternit SA and Positivo Tecnologia

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

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

Diversification Opportunities for Eternit SA and Positivo Tecnologia

-0.08

Correlation Coefficient

Eternit SA  Positivo Tecnologia

Good diversification

The 3 months correlation between Eternit and Positivo is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Eternit SA and Positivo Tecnologia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Positivo Tecnologia and Eternit 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 Eternit SA are associated (or correlated) with Positivo Tecnologia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Positivo Tecnologia has no effect on the direction of Eternit SA i.e., Eternit SA and Positivo Tecnologia go up and down completely randomly.

Pair Corralation between Eternit SA and Positivo Tecnologia

Assuming the 90 days trading horizon Eternit SA is expected to generate 0.83 times more return on investment than Positivo Tecnologia. However, Eternit SA is 1.2 times less risky than Positivo Tecnologia. It trades about 0.18 of its potential returns per unit of risk. Positivo Tecnologia SA is currently generating about -0.28 per unit of risk. If you would invest  514.00  in Eternit SA on August 31, 2024 and sell it today you would earn a total of  62.00  from holding Eternit SA or generate 12.06% return on investment over 90 days.

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

Eternit SA  vs.  Positivo Tecnologia SA

Eternit SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eternit SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Eternit SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Positivo Tecnologia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Positivo Tecnologia SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Eternit SA and Positivo Tecnologia

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

The idea behind Eternit SA and Positivo Tecnologia 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.