Correlation Between Klabin SA and Banco Pine

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

By analyzing existing cross correlation between Klabin SA and Banco Pine SA, you can compare the effects of market volatilities on Klabin SA and Banco Pine 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 Klabin SA with a short position of Banco Pine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klabin SA and Banco Pine.

Diversification Opportunities for Klabin SA and Banco Pine

-0.62

Correlation Coefficient

Klabin SA  Banco Pine

Excellent diversification

The 3 months correlation between Klabin and Banco is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Klabin SA and Banco Pine SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Pine SA and Klabin SA 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 Klabin SA are associated (or correlated) with Banco Pine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Pine SA has no effect on the direction of Klabin SA i.e., Klabin SA and Banco Pine go up and down completely randomly.

Pair Corralation between Klabin SA and Banco Pine

Assuming the 90 days trading horizon Klabin SA is expected to generate 3.0 times less return on investment than Banco Pine. But when comparing it to its historical volatility, Klabin SA is 1.74 times less risky than Banco Pine. It trades about 0.05 of its potential returns per unit of risk. Banco Pine SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  132.00  in Banco Pine SA on October 10, 2024 and sell it today you would earn a total of  300.00  from holding Banco Pine SA or generate 227.27% return on investment over 90 days.

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

Klabin SA  vs.  Banco Pine SA

Klabin SA

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Klabin SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Klabin SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Banco Pine SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Klabin SA and Banco Pine

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

The idea behind Klabin SA and Banco Pine 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.