Correlation Between LESTE FDO and CCR SA

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

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

Diversification Opportunities for LESTE FDO and CCR SA

0.2

Correlation Coefficient

LESTE FDO  CCR SA

Modest diversification

The 3 months correlation between LESTE and CCR is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding LESTE FDO INV and CCR SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCR SA and LESTE FDO 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 LESTE FDO INV are associated (or correlated) with CCR SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCR SA has no effect on the direction of LESTE FDO i.e., LESTE FDO and CCR SA go up and down completely randomly.

Pair Corralation between LESTE FDO and CCR SA

Assuming the 90 days trading horizon LESTE FDO INV is expected to under-perform the CCR SA. But the fund apears to be less risky and, when comparing its historical volatility, LESTE FDO INV is 1.3 times less risky than CCR SA. The fund trades about -0.04 of its potential returns per unit of risk. The CCR SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,079  in CCR SA on December 3, 2024 and sell it today you would earn a total of  91.00  from holding CCR SA or generate 8.43% return on investment over 90 days.

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

LESTE FDO INV  vs.  CCR SA

LESTE FDO INV

Risk-Adjusted Performance

Very Weak

Over the last 90 days LESTE FDO INV has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, LESTE FDO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CCR SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CCR SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CCR SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with LESTE FDO and CCR SA

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

The idea behind LESTE FDO INV and CCR 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.