Correlation Between Impresa Sociedade and Teixeira Duarte

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

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

Diversification Opportunities for Impresa Sociedade and Teixeira Duarte

0.66

Correlation Coefficient

Impresa Sociedade  Teixeira Duarte

Poor diversification

The 3 months correlation between Impresa and Teixeira is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Impresa Sociedade and Teixeira Duarte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teixeira Duarte and Impresa Sociedade 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 Impresa Sociedade are associated (or correlated) with Teixeira Duarte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teixeira Duarte has no effect on the direction of Impresa Sociedade i.e., Impresa Sociedade and Teixeira Duarte go up and down completely randomly.

Pair Corralation between Impresa Sociedade and Teixeira Duarte

Assuming the 90 days trading horizon Impresa Sociedade is expected to generate 1.95 times more return on investment than Teixeira Duarte. However, Impresa Sociedade is 1.95 times more volatile than Teixeira Duarte. It trades about 0.01 of its potential returns per unit of risk. Teixeira Duarte is currently generating about -0.07 per unit of risk. If you would invest  12.00  in Impresa Sociedade on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Impresa Sociedade or generate 0.0% return on investment over 90 days.

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

Impresa Sociedade  vs.  Teixeira Duarte

Impresa Sociedade

Risk-Adjusted Performance

0 of 100

Very Weak

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

Teixeira Duarte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teixeira Duarte has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Impresa Sociedade and Teixeira Duarte

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

The idea behind Impresa Sociedade and Teixeira Duarte 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.