Correlation Between Gol Intelligent and SIDETRADE

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

By analyzing existing cross correlation between Gol Intelligent Airlines and SIDETRADE EO 1, you can compare the effects of market volatilities on Gol Intelligent and SIDETRADE 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 Gol Intelligent with a short position of SIDETRADE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gol Intelligent and SIDETRADE.

Diversification Opportunities for Gol Intelligent and SIDETRADE

0.0

Correlation Coefficient

Gol Intelligent  SIDETRADE

Pay attention - limited upside

The 3 months correlation between Gol and SIDETRADE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gol Intelligent Airlines and SIDETRADE EO 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIDETRADE EO 1 and Gol Intelligent 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 Gol Intelligent Airlines are associated (or correlated) with SIDETRADE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIDETRADE EO 1 has no effect on the direction of Gol Intelligent i.e., Gol Intelligent and SIDETRADE go up and down completely randomly.

Pair Corralation between Gol Intelligent and SIDETRADE

Assuming the 90 days trading horizon Gol Intelligent Airlines is expected to under-perform the SIDETRADE. In addition to that, Gol Intelligent is 3.59 times more volatile than SIDETRADE EO 1. It trades about -0.01 of its total potential returns per unit of risk. SIDETRADE EO 1 is currently generating about 0.05 per unit of volatility. If you would invest  15,200  in SIDETRADE EO 1 on October 4, 2024 and sell it today you would earn a total of  6,800  from holding SIDETRADE EO 1 or generate 44.74% return on investment over 90 days.

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

Gol Intelligent Airlines  vs.  SIDETRADE EO 1

Gol Intelligent Airlines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gol Intelligent Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Gol Intelligent is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SIDETRADE EO 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIDETRADE EO 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SIDETRADE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gol Intelligent and SIDETRADE

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

The idea behind Gol Intelligent Airlines and SIDETRADE EO 1 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.