Correlation Between LESTE FDO and Rumo SA

Can any of the company-specific risk be diversified away by investing in both LESTE FDO and Rumo 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 Rumo 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 Rumo SA, you can compare the effects of market volatilities on LESTE FDO and Rumo 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 Rumo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LESTE FDO and Rumo SA.

Diversification Opportunities for LESTE FDO and Rumo SA

0.0

Correlation Coefficient

LESTE FDO  Rumo SA

Pay attention - limited upside

The 3 months correlation between LESTE and Rumo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LESTE FDO INV and Rumo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rumo 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 Rumo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rumo SA has no effect on the direction of LESTE FDO i.e., LESTE FDO and Rumo SA go up and down completely randomly.

Pair Corralation between LESTE FDO and Rumo SA

If you would invest  0.00  in LESTE FDO INV on December 30, 2024 and sell it today you would earn a total of  0.00  from holding LESTE FDO INV or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

LESTE FDO INV  vs.  Rumo SA

LESTE FDO INV

Risk-Adjusted Performance

Good

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.

Rumo SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rumo SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Rumo SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with LESTE FDO and Rumo SA

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

The idea behind LESTE FDO INV and Rumo 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.