Correlation Between HEDGE Brasil and HEDGE DESENVOLVIMENTO

Can any of the company-specific risk be diversified away by investing in both HEDGE Brasil and HEDGE DESENVOLVIMENTO 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 HEDGE DESENVOLVIMENTO 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 HEDGE DESENVOLVIMENTO LOGSTICO, you can compare the effects of market volatilities on HEDGE Brasil and HEDGE DESENVOLVIMENTO 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 HEDGE DESENVOLVIMENTO. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEDGE Brasil and HEDGE DESENVOLVIMENTO.

Diversification Opportunities for HEDGE Brasil and HEDGE DESENVOLVIMENTO

0.63

Correlation Coefficient

HEDGE Brasil  HEDGE DESENVOLVIMENTO

Poor diversification

The 3 months correlation between HEDGE and HEDGE is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding HEDGE Brasil Shopping and HEDGE DESENVOLVIMENTO LOGSTICO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEDGE DESENVOLVIMENTO 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 HEDGE DESENVOLVIMENTO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEDGE DESENVOLVIMENTO has no effect on the direction of HEDGE Brasil i.e., HEDGE Brasil and HEDGE DESENVOLVIMENTO go up and down completely randomly.

Pair Corralation between HEDGE Brasil and HEDGE DESENVOLVIMENTO

Assuming the 90 days trading horizon HEDGE Brasil Shopping is expected to generate 0.58 times more return on investment than HEDGE DESENVOLVIMENTO. However, HEDGE Brasil Shopping is 1.73 times less risky than HEDGE DESENVOLVIMENTO. It trades about -0.21 of its potential returns per unit of risk. HEDGE DESENVOLVIMENTO LOGSTICO is currently generating about -0.3 per unit of risk. If you would invest  19,415  in HEDGE Brasil Shopping on September 12, 2024 and sell it today you would lose (1,274) from holding HEDGE Brasil Shopping or give up 6.56% of portfolio value over 90 days.

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

HEDGE Brasil Shopping  vs.  HEDGE DESENVOLVIMENTO LOGSTICO

HEDGE Brasil Shopping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEDGE Brasil Shopping has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

HEDGE DESENVOLVIMENTO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEDGE DESENVOLVIMENTO LOGSTICO has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with HEDGE Brasil and HEDGE DESENVOLVIMENTO

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

The idea behind HEDGE Brasil Shopping and HEDGE DESENVOLVIMENTO LOGSTICO 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.