Correlation Between Hsi Malls and Banco BTG

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

By analyzing existing cross correlation between Hsi Malls Fundo and Banco BTG Pactual, you can compare the effects of market volatilities on Hsi Malls and Banco BTG 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 Hsi Malls with a short position of Banco BTG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsi Malls and Banco BTG.

Diversification Opportunities for Hsi Malls and Banco BTG

0.68

Correlation Coefficient

Hsi Malls  Banco BTG

Poor diversification

The 3 months correlation between Hsi and Banco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hsi Malls Fundo and Banco BTG Pactual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco BTG Pactual and Hsi Malls 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 Hsi Malls Fundo are associated (or correlated) with Banco BTG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco BTG Pactual has no effect on the direction of Hsi Malls i.e., Hsi Malls and Banco BTG go up and down completely randomly.

Pair Corralation between Hsi Malls and Banco BTG

Assuming the 90 days trading horizon Hsi Malls is expected to generate 1.13 times less return on investment than Banco BTG. But when comparing it to its historical volatility, Hsi Malls Fundo is 2.24 times less risky than Banco BTG. It trades about 0.23 of its potential returns per unit of risk. Banco BTG Pactual is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  693.00  in Banco BTG Pactual on December 30, 2024 and sell it today you would earn a total of  116.00  from holding Banco BTG Pactual or generate 16.74% return on investment over 90 days.

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

Hsi Malls Fundo  vs.  Banco BTG Pactual

Hsi Malls Fundo

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hsi Malls Fundo are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak primary indicators, Hsi Malls sustained solid returns over the last few months and may actually be approaching a breakup point.

Banco BTG Pactual

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Banco BTG Pactual are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Banco BTG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hsi Malls and Banco BTG

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

The idea behind Hsi Malls Fundo and Banco BTG Pactual 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.