Correlation Between Hypera SA and Raia Drogasil

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

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

Diversification Opportunities for Hypera SA and Raia Drogasil

0.53

Correlation Coefficient

Hypera SA  Raia Drogasil

Very weak diversification

The 3 months correlation between Hypera and Raia is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hypera SA and Raia Drogasil SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raia Drogasil SA and Hypera SA 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 Hypera SA are associated (or correlated) with Raia Drogasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raia Drogasil SA has no effect on the direction of Hypera SA i.e., Hypera SA and Raia Drogasil go up and down completely randomly.

Pair Corralation between Hypera SA and Raia Drogasil

Assuming the 90 days horizon Hypera SA is expected to generate 3.34 times less return on investment than Raia Drogasil. But when comparing it to its historical volatility, Hypera SA is 2.06 times less risky than Raia Drogasil. It trades about 0.02 of its potential returns per unit of risk. Raia Drogasil SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  372.00  in Raia Drogasil SA on October 8, 2024 and sell it today you would lose (11.00) from holding Raia Drogasil SA or give up 2.96% of portfolio value over 90 days.

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

Hypera SA  vs.  Raia Drogasil SA

Hypera SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hypera SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Raia Drogasil SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raia Drogasil SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Raia Drogasil is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hypera SA and Raia Drogasil

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

The idea behind Hypera SA and Raia Drogasil SA 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.