Correlation Between Ibersol SGPS and Futebol Clube

Can any of the company-specific risk be diversified away by investing in both Ibersol SGPS and Futebol Clube 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 Ibersol SGPS and Futebol Clube into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ibersol SGPS and Futebol Clube do, you can compare the effects of market volatilities on Ibersol SGPS and Futebol Clube 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 Ibersol SGPS with a short position of Futebol Clube. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ibersol SGPS and Futebol Clube.

Diversification Opportunities for Ibersol SGPS and Futebol Clube

-0.42

Correlation Coefficient

Ibersol SGPS  Futebol Clube

Very good diversification

The 3 months correlation between Ibersol and Futebol is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ibersol SGPS and Futebol Clube do in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futebol Clube do and Ibersol SGPS 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 Ibersol SGPS are associated (or correlated) with Futebol Clube. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futebol Clube do has no effect on the direction of Ibersol SGPS i.e., Ibersol SGPS and Futebol Clube go up and down completely randomly.

Pair Corralation between Ibersol SGPS and Futebol Clube

Assuming the 90 days trading horizon Ibersol SGPS is expected to generate 0.48 times more return on investment than Futebol Clube. However, Ibersol SGPS is 2.08 times less risky than Futebol Clube. It trades about 0.06 of its potential returns per unit of risk. Futebol Clube do is currently generating about -0.04 per unit of risk. If you would invest  724.00  in Ibersol SGPS on September 16, 2024 and sell it today you would earn a total of  32.00  from holding Ibersol SGPS or generate 4.42% return on investment over 90 days.

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

Ibersol SGPS  vs.  Futebol Clube do

Ibersol SGPS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ibersol SGPS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ibersol SGPS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Futebol Clube do

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Futebol Clube do has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Futebol Clube is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ibersol SGPS and Futebol Clube

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

The idea behind Ibersol SGPS and Futebol Clube do 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..