Correlation Between Joo Fortes and Tecnisa SA

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

Diversification Opportunities for Joo Fortes and Tecnisa SA

0.68

Correlation Coefficient

Joo Fortes  Tecnisa SA

Poor diversification

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

Pair Corralation between Joo Fortes and Tecnisa SA

Assuming the 90 days trading horizon Joo Fortes Engenharia is expected to under-perform the Tecnisa SA. In addition to that, Joo Fortes is 2.43 times more volatile than Tecnisa SA. It trades about -0.18 of its total potential returns per unit of risk. Tecnisa SA is currently generating about -0.06 per unit of volatility. If you would invest  141.00  in Tecnisa SA on September 16, 2024 and sell it today you would lose (7.00) from holding Tecnisa SA or give up 4.96% of portfolio value over 90 days.

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

Joo Fortes Engenharia  vs.  Tecnisa SA

Joo Fortes Engenharia

Risk-Adjusted Performance

0 of 100

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Tecnisa SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tecnisa SA 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Joo Fortes and Tecnisa SA

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

The idea behind Joo Fortes Engenharia and Tecnisa 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.