Correlation Between Fleury SA and Diagnsticos

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

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

Diversification Opportunities for Fleury SA and Diagnsticos

0.83

Correlation Coefficient

Fleury SA  Diagnsticos

Very poor diversification

The 3 months correlation between Fleury and Diagnsticos is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fleury SA and Diagnsticos da Amrica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diagnsticos da Amrica and Fleury 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 Fleury SA are associated (or correlated) with Diagnsticos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diagnsticos da Amrica has no effect on the direction of Fleury SA i.e., Fleury SA and Diagnsticos go up and down completely randomly.

Pair Corralation between Fleury SA and Diagnsticos

Assuming the 90 days trading horizon Fleury SA is expected to generate 0.37 times more return on investment than Diagnsticos. However, Fleury SA is 2.71 times less risky than Diagnsticos. It trades about 0.01 of its potential returns per unit of risk. Diagnsticos da Amrica is currently generating about -0.05 per unit of risk. If you would invest  1,261  in Fleury SA on November 20, 2024 and sell it today you would lose (17.00) from holding Fleury SA or give up 1.35% of portfolio value over 90 days.

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

Fleury SA  vs.  Diagnsticos da Amrica

Fleury SA

Risk-Adjusted Performance

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 comparatively stable basic indicators, Fleury SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Diagnsticos da Amrica

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diagnsticos da Amrica 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.

Pair Trading with Fleury SA and Diagnsticos

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

The idea behind Fleury SA and Diagnsticos da Amrica 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.