Correlation Between HEDGE OFFICE and HEDGE DESENVOLVIMENTO

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

Diversification Opportunities for HEDGE OFFICE and HEDGE DESENVOLVIMENTO

0.09

Correlation Coefficient

HEDGE OFFICE  HEDGE DESENVOLVIMENTO

Significant diversification

The 3 months correlation between HEDGE and HEDGE is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding HEDGE OFFICE INCOME 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 OFFICE 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 OFFICE INCOME 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 OFFICE i.e., HEDGE OFFICE and HEDGE DESENVOLVIMENTO go up and down completely randomly.

Pair Corralation between HEDGE OFFICE and HEDGE DESENVOLVIMENTO

Assuming the 90 days trading horizon HEDGE OFFICE is expected to generate 2.54 times less return on investment than HEDGE DESENVOLVIMENTO. But when comparing it to its historical volatility, HEDGE OFFICE INCOME is 1.08 times less risky than HEDGE DESENVOLVIMENTO. It trades about 0.04 of its potential returns per unit of risk. HEDGE DESENVOLVIMENTO LOGSTICO is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  8,640  in HEDGE DESENVOLVIMENTO LOGSTICO on December 24, 2024 and sell it today you would earn a total of  1,360  from holding HEDGE DESENVOLVIMENTO LOGSTICO or generate 15.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

HEDGE OFFICE INCOME  vs.  HEDGE DESENVOLVIMENTO LOGSTICO

HEDGE OFFICE INCOME

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HEDGE OFFICE INCOME are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak technical and fundamental indicators, HEDGE OFFICE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

HEDGE DESENVOLVIMENTO

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HEDGE DESENVOLVIMENTO LOGSTICO are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak technical and fundamental indicators, HEDGE DESENVOLVIMENTO sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HEDGE OFFICE and HEDGE DESENVOLVIMENTO

The main advantage of trading using opposite HEDGE OFFICE and HEDGE DESENVOLVIMENTO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEDGE OFFICE 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 OFFICE INCOME 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.