Correlation Between Loft II and Aesapar Fundo

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

By analyzing existing cross correlation between Loft II Fundo and Aesapar Fundo de, you can compare the effects of market volatilities on Loft II and Aesapar Fundo 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 Loft II with a short position of Aesapar Fundo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loft II and Aesapar Fundo.

Diversification Opportunities for Loft II and Aesapar Fundo

0.47

Correlation Coefficient

Loft II  Aesapar Fundo

Very weak diversification

The 3 months correlation between Loft and Aesapar is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Loft II Fundo and Aesapar Fundo de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aesapar Fundo de and Loft II 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 Loft II Fundo are associated (or correlated) with Aesapar Fundo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aesapar Fundo de has no effect on the direction of Loft II i.e., Loft II and Aesapar Fundo go up and down completely randomly.

Pair Corralation between Loft II and Aesapar Fundo

Assuming the 90 days trading horizon Loft II Fundo is expected to under-perform the Aesapar Fundo. In addition to that, Loft II is 1.59 times more volatile than Aesapar Fundo de. It trades about -0.05 of its total potential returns per unit of risk. Aesapar Fundo de is currently generating about 0.02 per unit of volatility. If you would invest  8,946  in Aesapar Fundo de on October 21, 2024 and sell it today you would earn a total of  474.00  from holding Aesapar Fundo de or generate 5.3% return on investment over 90 days.

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

Loft II Fundo  vs.  Aesapar Fundo de

Loft II Fundo

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Loft II Fundo are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Loft II may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Aesapar Fundo de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aesapar Fundo de has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Loft II and Aesapar Fundo

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

The idea behind Loft II Fundo and Aesapar Fundo de 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.