Correlation Between Joo Fortes and PDG Realty

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

Diversification Opportunities for Joo Fortes and PDG Realty

-0.09

Correlation Coefficient

Joo Fortes  PDG Realty

Good diversification

The 3 months correlation between Joo and PDG is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Joo Fortes Engenharia and PDG Realty SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDG Realty SA 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 PDG Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDG Realty SA has no effect on the direction of Joo Fortes i.e., Joo Fortes and PDG Realty go up and down completely randomly.

Pair Corralation between Joo Fortes and PDG Realty

Assuming the 90 days trading horizon Joo Fortes is expected to generate 3.25 times less return on investment than PDG Realty. But when comparing it to its historical volatility, Joo Fortes Engenharia is 5.71 times less risky than PDG Realty. It trades about 0.02 of its potential returns per unit of risk. PDG Realty SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  125.00  in PDG Realty SA on December 5, 2024 and sell it today you would lose (54.00) from holding PDG Realty SA or give up 43.2% of portfolio value over 90 days.

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

Joo Fortes Engenharia  vs.  PDG Realty SA

Joo Fortes Engenharia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Joo Fortes Engenharia 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 Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

PDG Realty SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days PDG Realty SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, PDG Realty may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Joo Fortes and PDG Realty

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

The idea behind Joo Fortes Engenharia and PDG Realty 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.