Correlation Between HEDGE Brasil and Hapvida Participaes

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Can any of the company-specific risk be diversified away by investing in both HEDGE Brasil and Hapvida Participaes 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 HEDGE Brasil and Hapvida Participaes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEDGE Brasil Shopping and Hapvida Participaes e, you can compare the effects of market volatilities on HEDGE Brasil and Hapvida Participaes 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 HEDGE Brasil with a short position of Hapvida Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEDGE Brasil and Hapvida Participaes.

Diversification Opportunities for HEDGE Brasil and Hapvida Participaes

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between HEDGE and Hapvida is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding HEDGE Brasil Shopping and Hapvida Participaes e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hapvida Participaes and HEDGE Brasil 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 HEDGE Brasil Shopping are associated (or correlated) with Hapvida Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hapvida Participaes has no effect on the direction of HEDGE Brasil i.e., HEDGE Brasil and Hapvida Participaes go up and down completely randomly.

Pair Corralation between HEDGE Brasil and Hapvida Participaes

Assuming the 90 days trading horizon HEDGE Brasil Shopping is expected to generate 0.28 times more return on investment than Hapvida Participaes. However, HEDGE Brasil Shopping is 3.57 times less risky than Hapvida Participaes. It trades about -0.2 of its potential returns per unit of risk. Hapvida Participaes e is currently generating about -0.31 per unit of risk. If you would invest  21,087  in HEDGE Brasil Shopping on September 5, 2024 and sell it today you would lose (1,786) from holding HEDGE Brasil Shopping or give up 8.47% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy96.83%
ValuesDaily Returns

HEDGE Brasil Shopping  vs.  Hapvida Participaes e

 Performance 
       Timeline  
HEDGE Brasil Shopping 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days HEDGE Brasil Shopping has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.
Hapvida Participaes 

Risk-Adjusted Performance

0 of 100

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

HEDGE Brasil and Hapvida Participaes Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HEDGE Brasil and Hapvida Participaes

The main advantage of trading using opposite HEDGE Brasil and Hapvida Participaes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEDGE Brasil position performs unexpectedly, Hapvida Participaes 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 Hapvida Participaes will offset losses from the drop in Hapvida Participaes' long position.
The idea behind HEDGE Brasil Shopping and Hapvida Participaes e 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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