Correlation Between Inepar SA and Fertilizantes Heringer

Can any of the company-specific risk be diversified away by investing in both Inepar SA and Fertilizantes Heringer 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 Fertilizantes Heringer 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 Fertilizantes Heringer SA, you can compare the effects of market volatilities on Inepar SA and Fertilizantes Heringer 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 Fertilizantes Heringer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inepar SA and Fertilizantes Heringer.

Diversification Opportunities for Inepar SA and Fertilizantes Heringer

-0.19

Correlation Coefficient

Inepar SA  Fertilizantes Heringer

Good diversification

The 3 months correlation between Inepar and Fertilizantes is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Inepar SA Indstria and Fertilizantes Heringer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fertilizantes Heringer 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 Fertilizantes Heringer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fertilizantes Heringer has no effect on the direction of Inepar SA i.e., Inepar SA and Fertilizantes Heringer go up and down completely randomly.

Pair Corralation between Inepar SA and Fertilizantes Heringer

Assuming the 90 days trading horizon Inepar SA Indstria is expected to under-perform the Fertilizantes Heringer. But the preferred stock apears to be less risky and, when comparing its historical volatility, Inepar SA Indstria is 4.07 times less risky than Fertilizantes Heringer. The preferred stock trades about -0.12 of its potential returns per unit of risk. The Fertilizantes Heringer SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  391.00  in Fertilizantes Heringer SA on September 16, 2024 and sell it today you would earn a total of  293.00  from holding Fertilizantes Heringer SA or generate 74.94% return on investment over 90 days.

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

Inepar SA Indstria  vs.  Fertilizantes Heringer 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.

Fertilizantes Heringer

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fertilizantes Heringer SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Fertilizantes Heringer unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inepar SA and Fertilizantes Heringer

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

The idea behind Inepar SA Indstria and Fertilizantes Heringer 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.