Correlation Between LACTATE NATURA and SCUT SA

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

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

Diversification Opportunities for LACTATE NATURA and SCUT SA

0.0

Correlation Coefficient

LACTATE NATURA  SCUT SA

Pay attention - limited upside

The 3 months correlation between LACTATE and SCUT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LACTATE NATURA SA and SCUT SA BACAU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCUT SA BACAU and LACTATE NATURA 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 LACTATE NATURA SA are associated (or correlated) with SCUT SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCUT SA BACAU has no effect on the direction of LACTATE NATURA i.e., LACTATE NATURA and SCUT SA go up and down completely randomly.

Pair Corralation between LACTATE NATURA and SCUT SA

If you would invest  2,475  in SCUT SA BACAU on October 10, 2024 and sell it today you would lose (115.00) from holding SCUT SA BACAU or give up 4.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

LACTATE NATURA SA  vs.  SCUT SA BACAU

LACTATE NATURA SA

Risk-Adjusted Performance

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Very Weak

Over the last 90 days LACTATE NATURA SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, LACTATE NATURA is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

SCUT SA BACAU

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCUT SA BACAU has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with LACTATE NATURA and SCUT SA

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

The idea behind LACTATE NATURA SA and SCUT SA BACAU 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.