Correlation Between Hapvida Participaes and Natura Co

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

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

Diversification Opportunities for Hapvida Participaes and Natura Co

0.14

Correlation Coefficient

Hapvida Participaes  Natura Co

Average diversification

The 3 months correlation between Hapvida and Natura is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hapvida Participaes e and Natura Co Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natura Co Holding and Hapvida 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 Hapvida Participaes e are associated (or correlated) with Natura Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natura Co Holding has no effect on the direction of Hapvida Participaes i.e., Hapvida Participaes and Natura Co go up and down completely randomly.

Pair Corralation between Hapvida Participaes and Natura Co

Assuming the 90 days trading horizon Hapvida Participaes e is expected to generate 0.84 times more return on investment than Natura Co. However, Hapvida Participaes e is 1.2 times less risky than Natura Co. It trades about 0.03 of its potential returns per unit of risk. Natura Co Holding is currently generating about -0.04 per unit of risk. If you would invest  223.00  in Hapvida Participaes e on December 29, 2024 and sell it today you would earn a total of  7.00  from holding Hapvida Participaes e or generate 3.14% return on investment over 90 days.

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

Hapvida Participaes e  vs.  Natura Co Holding

Hapvida Participaes

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hapvida Participaes e are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hapvida Participaes may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Natura Co Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Natura Co Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hapvida Participaes and Natura Co

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

The idea behind Hapvida Participaes e and Natura Co Holding 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.