Correlation Between Fras Le and Cambuci SA

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

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

Diversification Opportunities for Fras Le and Cambuci SA

-0.05

Correlation Coefficient

Fras Le  Cambuci SA

Good diversification

The 3 months correlation between Fras and Cambuci is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Fras le SA and Cambuci SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambuci SA and Fras Le 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 Fras le SA are associated (or correlated) with Cambuci SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambuci SA has no effect on the direction of Fras Le i.e., Fras Le and Cambuci SA go up and down completely randomly.

Pair Corralation between Fras Le and Cambuci SA

Assuming the 90 days trading horizon Fras le SA is expected to generate 0.77 times more return on investment than Cambuci SA. However, Fras le SA is 1.3 times less risky than Cambuci SA. It trades about 0.05 of its potential returns per unit of risk. Cambuci SA is currently generating about -0.11 per unit of risk. If you would invest  1,953  in Fras le SA on September 2, 2024 and sell it today you would earn a total of  83.00  from holding Fras le SA or generate 4.25% return on investment over 90 days.

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

Fras le SA  vs.  Cambuci SA

Fras le SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fras le SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fras Le is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Cambuci SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cambuci SA 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.

Pair Trading with Fras Le and Cambuci SA

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

The idea behind Fras le SA and Cambuci 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.