Correlation Between Guararapes Confeces and Tupy SA

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

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

Diversification Opportunities for Guararapes Confeces and Tupy SA

-0.47

Correlation Coefficient

Guararapes Confeces  Tupy SA

Very good diversification

The 3 months correlation between Guararapes and Tupy is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Guararapes Confeces SA and Tupy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tupy SA and Guararapes Confeces 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 Guararapes Confeces SA are associated (or correlated) with Tupy SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tupy SA has no effect on the direction of Guararapes Confeces i.e., Guararapes Confeces and Tupy SA go up and down completely randomly.

Pair Corralation between Guararapes Confeces and Tupy SA

Assuming the 90 days trading horizon Guararapes Confeces SA is expected to under-perform the Tupy SA. In addition to that, Guararapes Confeces is 1.59 times more volatile than Tupy SA. It trades about -0.04 of its total potential returns per unit of risk. Tupy SA is currently generating about 0.07 per unit of volatility. If you would invest  1,893  in Tupy SA on December 2, 2024 and sell it today you would earn a total of  167.00  from holding Tupy SA or generate 8.82% return on investment over 90 days.

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

Guararapes Confeces SA  vs.  Tupy SA

Guararapes Confeces

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guararapes Confeces 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.

Tupy SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tupy SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Tupy SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Guararapes Confeces and Tupy SA

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

The idea behind Guararapes Confeces SA and Tupy 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.