Correlation Between Gafisa SA and Randon SA

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

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

Diversification Opportunities for Gafisa SA and Randon SA

0.53

Correlation Coefficient

Gafisa SA  Randon SA

Very weak diversification

The 3 months correlation between Gafisa and Randon is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Gafisa SA and Randon SA Implementos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Randon SA Implementos and Gafisa 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 Gafisa SA are associated (or correlated) with Randon SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Randon SA Implementos has no effect on the direction of Gafisa SA i.e., Gafisa SA and Randon SA go up and down completely randomly.

Pair Corralation between Gafisa SA and Randon SA

Assuming the 90 days trading horizon Gafisa SA is expected to under-perform the Randon SA. In addition to that, Gafisa SA is 2.78 times more volatile than Randon SA Implementos. It trades about -0.04 of its total potential returns per unit of risk. Randon SA Implementos is currently generating about 0.0 per unit of volatility. If you would invest  1,120  in Randon SA Implementos on August 31, 2024 and sell it today you would lose (78.00) from holding Randon SA Implementos or give up 6.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.73%
Values	Daily Returns

Gafisa SA  vs.  Randon SA Implementos

Gafisa SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gafisa 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 December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Randon SA Implementos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Randon SA Implementos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Preferred 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 Gafisa SA and Randon SA

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

The idea behind Gafisa SA and Randon SA Implementos 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.