Correlation Between Ihuman and Vasta Platform

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

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

Diversification Opportunities for Ihuman and Vasta Platform

0.79

Correlation Coefficient

Ihuman  Vasta Platform

Poor diversification

The 3 months correlation between Ihuman and Vasta is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ihuman Inc and Vasta Platform in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vasta Platform and Ihuman 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 Ihuman Inc are associated (or correlated) with Vasta Platform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vasta Platform has no effect on the direction of Ihuman i.e., Ihuman and Vasta Platform go up and down completely randomly.

Pair Corralation between Ihuman and Vasta Platform

Allowing for the 90-day total investment horizon Ihuman is expected to generate 1.9 times less return on investment than Vasta Platform. In addition to that, Ihuman is 1.46 times more volatile than Vasta Platform. It trades about 0.13 of its total potential returns per unit of risk. Vasta Platform is currently generating about 0.35 per unit of volatility. If you would invest  216.00  in Vasta Platform on December 28, 2024 and sell it today you would earn a total of  219.00  from holding Vasta Platform or generate 101.39% return on investment over 90 days.

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

Ihuman Inc  vs.  Vasta Platform

Ihuman Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ihuman Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Ihuman demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Vasta Platform

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vasta Platform are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vasta Platform sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ihuman and Vasta Platform

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

The idea behind Ihuman Inc and Vasta Platform 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.