Correlation Between Fluidra and Vidrala SA

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

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

Diversification Opportunities for Fluidra and Vidrala SA

-0.55

Correlation Coefficient

Fluidra  Vidrala SA

Excellent diversification

The 3 months correlation between Fluidra and Vidrala is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fluidra and Vidrala SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vidrala SA and Fluidra 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 Fluidra are associated (or correlated) with Vidrala SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vidrala SA has no effect on the direction of Fluidra i.e., Fluidra and Vidrala SA go up and down completely randomly.

Pair Corralation between Fluidra and Vidrala SA

Assuming the 90 days trading horizon Fluidra is expected to under-perform the Vidrala SA. In addition to that, Fluidra is 1.18 times more volatile than Vidrala SA. It trades about -0.03 of its total potential returns per unit of risk. Vidrala SA is currently generating about 0.06 per unit of volatility. If you would invest  9,025  in Vidrala SA on December 30, 2024 and sell it today you would earn a total of  405.00  from holding Vidrala SA or generate 4.49% return on investment over 90 days.

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

Fluidra  vs.  Vidrala SA

Fluidra

Risk-Adjusted Performance

Very Weak

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

Vidrala SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vidrala SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Vidrala SA is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fluidra and Vidrala SA

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

The idea behind Fluidra and Vidrala 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.