Correlation Between Exceed World and Arco Platform

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

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

Diversification Opportunities for Exceed World and Arco Platform

0.44

Correlation Coefficient

Exceed World  Arco Platform

Very weak diversification

The 3 months correlation between Exceed and Arco is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Exceed World and Arco Platform in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arco Platform and Exceed World 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 Exceed World are associated (or correlated) with Arco Platform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arco Platform has no effect on the direction of Exceed World i.e., Exceed World and Arco Platform go up and down completely randomly.

Pair Corralation between Exceed World and Arco Platform

If you would invest  30.00  in Exceed World on September 19, 2024 and sell it today you would earn a total of  20.00  from holding Exceed World or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Exceed World  vs.  Arco Platform

Exceed World

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exceed World are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, Exceed World showed solid returns over the last few months and may actually be approaching a breakup point.

Arco Platform

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arco Platform has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Arco Platform is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Exceed World and Arco Platform

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

The idea behind Exceed World and Arco Platform 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.