Correlation Between Klabin SA and Toyota

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

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

Diversification Opportunities for Klabin SA and Toyota

0.52

Correlation Coefficient

Klabin SA  Toyota

Very weak diversification

The 3 months correlation between Klabin and Toyota is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Klabin SA and Toyota Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Motor 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 Toyota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toyota Motor has no effect on the direction of Klabin SA i.e., Klabin SA and Toyota go up and down completely randomly.

Pair Corralation between Klabin SA and Toyota

Assuming the 90 days trading horizon Klabin SA is expected to under-perform the Toyota. But the stock apears to be less risky and, when comparing its historical volatility, Klabin SA is 1.15 times less risky than Toyota. The stock trades about -0.22 of its potential returns per unit of risk. The Toyota Motor is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  7,572  in Toyota Motor on December 30, 2024 and sell it today you would lose (1,143) from holding Toyota Motor or give up 15.1% of portfolio value over 90 days.

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

Klabin SA  vs.  Toyota Motor

Klabin SA

Risk-Adjusted Performance

Very Weak

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

Toyota Motor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Toyota Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Klabin SA and Toyota

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

The idea behind Klabin SA and Toyota Motor 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.