Correlation Between Infinity Capital and Patria Bank

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

By analyzing existing cross correlation between Infinity Capital Investments and Patria Bank SA, you can compare the effects of market volatilities on Infinity Capital and Patria Bank 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 Infinity Capital with a short position of Patria Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infinity Capital and Patria Bank.

Diversification Opportunities for Infinity Capital and Patria Bank

0.73

Correlation Coefficient

Infinity Capital  Patria Bank

Poor diversification

The 3 months correlation between Infinity and Patria is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Infinity Capital Investments and Patria Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Bank SA and Infinity Capital 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 Infinity Capital Investments are associated (or correlated) with Patria Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Bank SA has no effect on the direction of Infinity Capital i.e., Infinity Capital and Patria Bank go up and down completely randomly.

Pair Corralation between Infinity Capital and Patria Bank

Assuming the 90 days trading horizon Infinity Capital is expected to generate 2.57 times less return on investment than Patria Bank. In addition to that, Infinity Capital is 1.22 times more volatile than Patria Bank SA. It trades about 0.04 of its total potential returns per unit of risk. Patria Bank SA is currently generating about 0.11 per unit of volatility. If you would invest  8.00  in Patria Bank SA on September 28, 2024 and sell it today you would earn a total of  0.20  from holding Patria Bank SA or generate 2.5% return on investment over 90 days.

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

Infinity Capital Investments  vs.  Patria Bank SA

Infinity Capital Inv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Infinity Capital Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Infinity Capital is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Patria Bank SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Bank SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking signals, Patria Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Infinity Capital and Patria Bank

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

The idea behind Infinity Capital Investments and Patria Bank 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.