Correlation Between Joo Fortes and CoStar

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

By analyzing existing cross correlation between Joo Fortes Engenharia and CoStar Group, you can compare the effects of market volatilities on Joo Fortes and CoStar 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 Joo Fortes with a short position of CoStar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Joo Fortes and CoStar.

Diversification Opportunities for Joo Fortes and CoStar

-0.22

Correlation Coefficient

Joo Fortes  CoStar

Very good diversification

The 3 months correlation between Joo and CoStar is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Joo Fortes Engenharia and CoStar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoStar Group and Joo Fortes 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 Joo Fortes Engenharia are associated (or correlated) with CoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoStar Group has no effect on the direction of Joo Fortes i.e., Joo Fortes and CoStar go up and down completely randomly.

Pair Corralation between Joo Fortes and CoStar

Assuming the 90 days trading horizon Joo Fortes Engenharia is expected to generate 2.7 times more return on investment than CoStar. However, Joo Fortes is 2.7 times more volatile than CoStar Group. It trades about 0.03 of its potential returns per unit of risk. CoStar Group is currently generating about 0.05 per unit of risk. If you would invest  228.00  in Joo Fortes Engenharia on December 29, 2024 and sell it today you would earn a total of  8.00  from holding Joo Fortes Engenharia or generate 3.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Joo Fortes Engenharia  vs.  CoStar Group

Joo Fortes Engenharia

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Joo Fortes Engenharia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Joo Fortes may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CoStar Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CoStar Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, CoStar is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Joo Fortes and CoStar

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

The idea behind Joo Fortes Engenharia and CoStar Group 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.