Correlation Between Companhia Habitasul and Equinix

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

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

Diversification Opportunities for Companhia Habitasul and Equinix

-0.61

Correlation Coefficient

Companhia Habitasul  Equinix

Excellent diversification

The 3 months correlation between Companhia and Equinix is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Habitasul de and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix and Companhia Habitasul 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 Companhia Habitasul de are associated (or correlated) with Equinix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinix has no effect on the direction of Companhia Habitasul i.e., Companhia Habitasul and Equinix go up and down completely randomly.

Pair Corralation between Companhia Habitasul and Equinix

Assuming the 90 days trading horizon Companhia Habitasul is expected to generate 1.45 times less return on investment than Equinix. In addition to that, Companhia Habitasul is 2.57 times more volatile than Equinix. It trades about 0.01 of its total potential returns per unit of risk. Equinix is currently generating about 0.05 per unit of volatility. If you would invest  4,574  in Equinix on October 22, 2024 and sell it today you would earn a total of  2,374  from holding Equinix or generate 51.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	73.79%
Values	Daily Returns

Companhia Habitasul de  vs.  Equinix

Companhia Habitasul

Risk-Adjusted Performance

0 of 100

Very Weak

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

Equinix

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Equinix may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Companhia Habitasul and Equinix

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

The idea behind Companhia Habitasul de and Equinix 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.