Correlation Between Natura Co and Yduqs Participaes

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

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

Diversification Opportunities for Natura Co and Yduqs Participaes

0.39

Correlation Coefficient

Natura Co  Yduqs Participaes

Weak diversification

The 3 months correlation between Natura and Yduqs is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Natura Co Holding and Yduqs Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yduqs Participaes and Natura Co 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 Natura Co Holding are associated (or correlated) with Yduqs Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yduqs Participaes has no effect on the direction of Natura Co i.e., Natura Co and Yduqs Participaes go up and down completely randomly.

Pair Corralation between Natura Co and Yduqs Participaes

Assuming the 90 days trading horizon Natura Co Holding is expected to generate 0.72 times more return on investment than Yduqs Participaes. However, Natura Co Holding is 1.39 times less risky than Yduqs Participaes. It trades about 0.04 of its potential returns per unit of risk. Yduqs Participaes SA is currently generating about -0.04 per unit of risk. If you would invest  1,351  in Natura Co Holding on September 4, 2024 and sell it today you would earn a total of  49.00  from holding Natura Co Holding or generate 3.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Natura Co Holding  vs.  Yduqs Participaes SA

Natura Co Holding

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Natura Co Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Natura Co is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Yduqs Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yduqs Participaes 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.

Pair Trading with Natura Co and Yduqs Participaes

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

The idea behind Natura Co Holding and Yduqs Participaes 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.