Correlation Between EZTEC Empreendimentos and Fleury SA

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

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

Diversification Opportunities for EZTEC Empreendimentos and Fleury SA

-0.34

Correlation Coefficient

EZTEC Empreendimentos  Fleury SA

Very good diversification

The 3 months correlation between EZTEC and Fleury is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding EZTEC Empreendimentos e and Fleury SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fleury SA and EZTEC Empreendimentos 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 EZTEC Empreendimentos e are associated (or correlated) with Fleury SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fleury SA has no effect on the direction of EZTEC Empreendimentos i.e., EZTEC Empreendimentos and Fleury SA go up and down completely randomly.

Pair Corralation between EZTEC Empreendimentos and Fleury SA

Assuming the 90 days trading horizon EZTEC Empreendimentos e is expected to generate 1.78 times more return on investment than Fleury SA. However, EZTEC Empreendimentos is 1.78 times more volatile than Fleury SA. It trades about -0.04 of its potential returns per unit of risk. Fleury SA is currently generating about -0.24 per unit of risk. If you would invest  1,332  in EZTEC Empreendimentos e on September 4, 2024 and sell it today you would lose (108.00) from holding EZTEC Empreendimentos e or give up 8.11% of portfolio value over 90 days.

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

EZTEC Empreendimentos e  vs.  Fleury SA

EZTEC Empreendimentos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EZTEC Empreendimentos e has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Fleury SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fleury 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with EZTEC Empreendimentos and Fleury SA

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

The idea behind EZTEC Empreendimentos e and Fleury 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.