Correlation Between Ita Unibanco and OSX Brasil

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

Diversification Opportunities for Ita Unibanco and OSX Brasil

0.68

Correlation Coefficient

Ita Unibanco  OSX Brasil

Poor diversification

The 3 months correlation between Ita and OSX is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ita Unibanco Holding and OSX Brasil SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSX Brasil SA 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 OSX Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSX Brasil SA has no effect on the direction of Ita Unibanco i.e., Ita Unibanco and OSX Brasil go up and down completely randomly.

Pair Corralation between Ita Unibanco and OSX Brasil

Assuming the 90 days trading horizon Ita Unibanco Holding is expected to generate 0.45 times more return on investment than OSX Brasil. However, Ita Unibanco Holding is 2.25 times less risky than OSX Brasil. It trades about -0.24 of its potential returns per unit of risk. OSX Brasil SA is currently generating about -0.14 per unit of risk. If you would invest  3,376  in Ita Unibanco Holding on September 25, 2024 and sell it today you would lose (287.00) from holding Ita Unibanco Holding or give up 8.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Ita Unibanco Holding  vs.  OSX Brasil SA

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 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.

OSX Brasil SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OSX Brasil SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, OSX Brasil 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 Ita Unibanco and OSX Brasil

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

The idea behind Ita Unibanco Holding and OSX Brasil 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.