Correlation Between Fundo De and Hotis Othon

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

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

Diversification Opportunities for Fundo De and Hotis Othon

-0.21

Correlation Coefficient

Fundo De  Hotis Othon

Very good diversification

The 3 months correlation between Fundo and Hotis is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fundo De Investimento and Hotis Othon SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotis Othon SA and Fundo De 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 Fundo De Investimento are associated (or correlated) with Hotis Othon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotis Othon SA has no effect on the direction of Fundo De i.e., Fundo De and Hotis Othon go up and down completely randomly.

Pair Corralation between Fundo De and Hotis Othon

Assuming the 90 days trading horizon Fundo De Investimento is expected to under-perform the Hotis Othon. In addition to that, Fundo De is 1.23 times more volatile than Hotis Othon SA. It trades about -0.07 of its total potential returns per unit of risk. Hotis Othon SA is currently generating about 0.18 per unit of volatility. If you would invest  234.00  in Hotis Othon SA on December 30, 2024 and sell it today you would earn a total of  99.00  from holding Hotis Othon SA or generate 42.31% return on investment over 90 days.

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

Fundo De Investimento  vs.  Hotis Othon SA

Fundo De Investimento

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fundo De Investimento has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Hotis Othon SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hotis Othon SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Hotis Othon unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fundo De and Hotis Othon

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

The idea behind Fundo De Investimento and Hotis Othon 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.