Correlation Between Lupatech and Azevedo Travassos

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

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

Diversification Opportunities for Lupatech and Azevedo Travassos

0.61

Correlation Coefficient

Lupatech  Azevedo Travassos

Poor diversification

The 3 months correlation between Lupatech and Azevedo is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA and Azevedo Travassos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azevedo Travassos and Lupatech 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 Lupatech SA are associated (or correlated) with Azevedo Travassos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azevedo Travassos has no effect on the direction of Lupatech i.e., Lupatech and Azevedo Travassos go up and down completely randomly.

Pair Corralation between Lupatech and Azevedo Travassos

Assuming the 90 days trading horizon Lupatech SA is expected to generate 0.8 times more return on investment than Azevedo Travassos. However, Lupatech SA is 1.25 times less risky than Azevedo Travassos. It trades about -0.07 of its potential returns per unit of risk. Azevedo Travassos SA is currently generating about -0.23 per unit of risk. If you would invest  151.00  in Lupatech SA on September 3, 2024 and sell it today you would lose (19.00) from holding Lupatech SA or give up 12.58% of portfolio value over 90 days.

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

Lupatech SA  vs.  Azevedo Travassos SA

Lupatech SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lupatech SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Azevedo Travassos

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lupatech and Azevedo Travassos

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

The idea behind Lupatech SA and Azevedo Travassos 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.