Correlation Between Klabin SA and Itasa Investimentos

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

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

Diversification Opportunities for Klabin SA and Itasa Investimentos

-0.83

Correlation Coefficient

Klabin SA  Itasa Investimentos

Pay attention - limited upside

The 3 months correlation between Klabin and Itasa is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Klabin SA and Itasa Investimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itasa Investimentos 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 Itasa Investimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itasa Investimentos has no effect on the direction of Klabin SA i.e., Klabin SA and Itasa Investimentos go up and down completely randomly.

Pair Corralation between Klabin SA and Itasa Investimentos

Assuming the 90 days trading horizon Klabin SA is expected to under-perform the Itasa Investimentos. But the preferred stock apears to be less risky and, when comparing its historical volatility, Klabin SA is 1.67 times less risky than Itasa Investimentos. The preferred stock trades about -0.25 of its potential returns per unit of risk. The Itasa Investimentos is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  840.00  in Itasa Investimentos on December 30, 2024 and sell it today you would earn a total of  147.00  from holding Itasa Investimentos or generate 17.5% return on investment over 90 days.

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

Klabin SA  vs.  Itasa Investimentos

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 Preferred 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.

Itasa Investimentos

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Itasa Investimentos are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Itasa Investimentos unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Klabin SA and Itasa Investimentos

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

The idea behind Klabin SA and Itasa Investimentos 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.