Correlation Between Gncc Capital and Amazonas Florestal

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

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

Diversification Opportunities for Gncc Capital and Amazonas Florestal

0.31

Correlation Coefficient

Gncc Capital  Amazonas Florestal

Weak diversification

The 3 months correlation between Gncc and Amazonas is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Gncc Capital and Amazonas Florestal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazonas Florestal and Gncc Capital 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 Gncc Capital are associated (or correlated) with Amazonas Florestal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazonas Florestal has no effect on the direction of Gncc Capital i.e., Gncc Capital and Amazonas Florestal go up and down completely randomly.

Pair Corralation between Gncc Capital and Amazonas Florestal

Given the investment horizon of 90 days Gncc Capital is expected to generate 9.86 times more return on investment than Amazonas Florestal. However, Gncc Capital is 9.86 times more volatile than Amazonas Florestal. It trades about 0.19 of its potential returns per unit of risk. Amazonas Florestal is currently generating about -0.22 per unit of risk. If you would invest  0.01  in Gncc Capital on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Gncc Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Gncc Capital  vs.  Amazonas Florestal

Gncc Capital

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gncc Capital are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental indicators, Gncc Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Amazonas Florestal

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazonas Florestal are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Amazonas Florestal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gncc Capital and Amazonas Florestal

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

The idea behind Gncc Capital and Amazonas Florestal 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.