Correlation Between Ouro Fino and Centro De

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

By analyzing existing cross correlation between Ouro Fino Sade and Centro de Imagem, you can compare the effects of market volatilities on Ouro Fino and Centro De 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 Ouro Fino with a short position of Centro De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ouro Fino and Centro De.

Diversification Opportunities for Ouro Fino and Centro De

0.16

Correlation Coefficient

Ouro Fino  Centro De

Average diversification

The 3 months correlation between Ouro and Centro is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ouro Fino Sade and Centro de Imagem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centro de Imagem and Ouro Fino 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 Ouro Fino Sade are associated (or correlated) with Centro De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centro de Imagem has no effect on the direction of Ouro Fino i.e., Ouro Fino and Centro De go up and down completely randomly.

Pair Corralation between Ouro Fino and Centro De

Assuming the 90 days trading horizon Ouro Fino Sade is expected to generate 0.53 times more return on investment than Centro De. However, Ouro Fino Sade is 1.89 times less risky than Centro De. It trades about 0.09 of its potential returns per unit of risk. Centro de Imagem is currently generating about -0.01 per unit of risk. If you would invest  1,935  in Ouro Fino Sade on December 30, 2024 and sell it today you would earn a total of  265.00  from holding Ouro Fino Sade or generate 13.7% return on investment over 90 days.

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

Ouro Fino Sade  vs.  Centro de Imagem

Ouro Fino Sade

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ouro Fino Sade are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Ouro Fino unveiled solid returns over the last few months and may actually be approaching a breakup point.

Centro de Imagem

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centro de Imagem has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Centro De 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 Ouro Fino and Centro De

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

The idea behind Ouro Fino Sade and Centro de Imagem 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.