Correlation Between Ita Unibanco and Refinaria

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

By analyzing existing cross correlation between Ita Unibanco Holding and Refinaria de Petrleos, you can compare the effects of market volatilities on Ita Unibanco and Refinaria 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 Ita Unibanco with a short position of Refinaria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ita Unibanco and Refinaria.

Diversification Opportunities for Ita Unibanco and Refinaria

0.59

Correlation Coefficient

Ita Unibanco  Refinaria

Very weak diversification

The 3 months correlation between Ita and Refinaria is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ita Unibanco Holding and Refinaria de Petrleos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Refinaria de Petrleos and Ita Unibanco 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 Ita Unibanco Holding are associated (or correlated) with Refinaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Refinaria de Petrleos has no effect on the direction of Ita Unibanco i.e., Ita Unibanco and Refinaria go up and down completely randomly.

Pair Corralation between Ita Unibanco and Refinaria

Assuming the 90 days trading horizon Ita Unibanco Holding is expected to under-perform the Refinaria. But the stock apears to be less risky and, when comparing its historical volatility, Ita Unibanco Holding is 2.94 times less risky than Refinaria. The stock trades about -0.15 of its potential returns per unit of risk. The Refinaria de Petrleos is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  244.00  in Refinaria de Petrleos on September 29, 2024 and sell it today you would earn a total of  12.00  from holding Refinaria de Petrleos or generate 4.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Ita Unibanco Holding  vs.  Refinaria de Petrleos

Ita Unibanco Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ita Unibanco Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the 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.

Refinaria de Petrleos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Refinaria de Petrleos 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 Ita Unibanco and Refinaria

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

The idea behind Ita Unibanco Holding and Refinaria de Petrleos 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.