Correlation Between GPS Participaes and Grupo SBF

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

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

Diversification Opportunities for GPS Participaes and Grupo SBF

0.65

Correlation Coefficient

GPS Participaes  Grupo SBF

Poor diversification

The 3 months correlation between GPS and Grupo is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding GPS Participaes e and Grupo SBF SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo SBF SA and GPS Participaes 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 GPS Participaes e are associated (or correlated) with Grupo SBF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo SBF SA has no effect on the direction of GPS Participaes i.e., GPS Participaes and Grupo SBF go up and down completely randomly.

Pair Corralation between GPS Participaes and Grupo SBF

Assuming the 90 days trading horizon GPS Participaes e is expected to generate 0.59 times more return on investment than Grupo SBF. However, GPS Participaes e is 1.7 times less risky than Grupo SBF. It trades about -0.11 of its potential returns per unit of risk. Grupo SBF SA is currently generating about -0.25 per unit of risk. If you would invest  1,797  in GPS Participaes e on September 4, 2024 and sell it today you would lose (195.00) from holding GPS Participaes e or give up 10.85% of portfolio value over 90 days.

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

GPS Participaes e  vs.  Grupo SBF SA

GPS Participaes e

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GPS Participaes e 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.

Grupo SBF SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo SBF 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GPS Participaes and Grupo SBF

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

The idea behind GPS Participaes e and Grupo SBF 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 CEOs Directory module to screen CEOs from public companies around the world.