Correlation Between EZTEC Empreendimentos and Odontoprev

Can any of the company-specific risk be diversified away by investing in both EZTEC Empreendimentos and Odontoprev 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 Odontoprev 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 Odontoprev SA, you can compare the effects of market volatilities on EZTEC Empreendimentos and Odontoprev 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 Odontoprev. Check out your portfolio center. Please also check ongoing floating volatility patterns of EZTEC Empreendimentos and Odontoprev.

Diversification Opportunities for EZTEC Empreendimentos and Odontoprev

0.25

Correlation Coefficient

EZTEC Empreendimentos  Odontoprev

Modest diversification

The 3 months correlation between EZTEC and Odontoprev is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding EZTEC Empreendimentos e and Odontoprev SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odontoprev 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 Odontoprev. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odontoprev SA has no effect on the direction of EZTEC Empreendimentos i.e., EZTEC Empreendimentos and Odontoprev go up and down completely randomly.

Pair Corralation between EZTEC Empreendimentos and Odontoprev

Assuming the 90 days trading horizon EZTEC Empreendimentos e is expected to generate 1.55 times more return on investment than Odontoprev. However, EZTEC Empreendimentos is 1.55 times more volatile than Odontoprev SA. It trades about 0.3 of its potential returns per unit of risk. Odontoprev SA is currently generating about 0.19 per unit of risk. If you would invest  1,094  in EZTEC Empreendimentos e on November 5, 2024 and sell it today you would earn a total of  177.00  from holding EZTEC Empreendimentos e or generate 16.18% return on investment over 90 days.

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

EZTEC Empreendimentos e  vs.  Odontoprev 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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Odontoprev SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with EZTEC Empreendimentos and Odontoprev

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

The idea behind EZTEC Empreendimentos e and Odontoprev 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..