Correlation Between Nordon Indstrias and Fica Empreendimentos

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

By analyzing existing cross correlation between Nordon Indstrias Metalrgicas and Fica Empreendimentos Imobiliarios, you can compare the effects of market volatilities on Nordon Indstrias and Fica Empreendimentos 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 Nordon Indstrias with a short position of Fica Empreendimentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordon Indstrias and Fica Empreendimentos.

Diversification Opportunities for Nordon Indstrias and Fica Empreendimentos

0.1

Correlation Coefficient

Nordon Indstrias  Fica Empreendimentos

Average diversification

The 3 months correlation between Nordon and Fica is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nordon Indstrias Metalrgicas and Fica Empreendimentos Imobiliar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fica Empreendimentos and Nordon Indstrias 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 Nordon Indstrias Metalrgicas are associated (or correlated) with Fica Empreendimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fica Empreendimentos has no effect on the direction of Nordon Indstrias i.e., Nordon Indstrias and Fica Empreendimentos go up and down completely randomly.

Pair Corralation between Nordon Indstrias and Fica Empreendimentos

Assuming the 90 days trading horizon Nordon Indstrias Metalrgicas is expected to under-perform the Fica Empreendimentos. But the stock apears to be less risky and, when comparing its historical volatility, Nordon Indstrias Metalrgicas is 1.05 times less risky than Fica Empreendimentos. The stock trades about -0.08 of its potential returns per unit of risk. The Fica Empreendimentos Imobiliarios is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,000.00  in Fica Empreendimentos Imobiliarios on October 8, 2024 and sell it today you would lose (20.00) from holding Fica Empreendimentos Imobiliarios or give up 2.0% of portfolio value over 90 days.

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

Nordon Indstrias Metalrgicas  vs.  Fica Empreendimentos Imobiliar

Nordon Indstrias Met

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordon Indstrias Metalrgicas 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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Fica Empreendimentos

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nordon Indstrias and Fica Empreendimentos

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

The idea behind Nordon Indstrias Metalrgicas and Fica Empreendimentos Imobiliarios 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.