Correlation Between Inepar SA and Excelsior Alimentos

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

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

Diversification Opportunities for Inepar SA and Excelsior Alimentos

0.7

Correlation Coefficient

Inepar SA  Excelsior Alimentos

Poor diversification

The 3 months correlation between Inepar and Excelsior is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Inepar SA Indstria and Excelsior Alimentos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excelsior Alimentos and Inepar 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 Inepar SA Indstria are associated (or correlated) with Excelsior Alimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excelsior Alimentos has no effect on the direction of Inepar SA i.e., Inepar SA and Excelsior Alimentos go up and down completely randomly.

Pair Corralation between Inepar SA and Excelsior Alimentos

Assuming the 90 days trading horizon Inepar SA Indstria is expected to under-perform the Excelsior Alimentos. In addition to that, Inepar SA is 15.2 times more volatile than Excelsior Alimentos SA. It trades about -0.06 of its total potential returns per unit of risk. Excelsior Alimentos SA is currently generating about -0.06 per unit of volatility. If you would invest  7,999  in Excelsior Alimentos SA on September 29, 2024 and sell it today you would lose (150.00) from holding Excelsior Alimentos SA or give up 1.88% of portfolio value over 90 days.

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

Inepar SA Indstria  vs.  Excelsior Alimentos SA

Inepar SA Indstria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inepar SA Indstria has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Excelsior Alimentos

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Inepar SA and Excelsior Alimentos

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

The idea behind Inepar SA Indstria and Excelsior Alimentos 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.