Correlation Between OSX Brasil and Companhia

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

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

Diversification Opportunities for OSX Brasil and Companhia

-0.62

Correlation Coefficient

OSX Brasil  Companhia

Excellent diversification

The 3 months correlation between OSX and Companhia is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding OSX Brasil SA and Companhia de Saneamento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Saneamento and OSX Brasil 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 OSX Brasil SA are associated (or correlated) with Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Saneamento has no effect on the direction of OSX Brasil i.e., OSX Brasil and Companhia go up and down completely randomly.

Pair Corralation between OSX Brasil and Companhia

Assuming the 90 days trading horizon OSX Brasil SA is expected to under-perform the Companhia. In addition to that, OSX Brasil is 2.11 times more volatile than Companhia de Saneamento. It trades about -0.31 of its total potential returns per unit of risk. Companhia de Saneamento is currently generating about 0.28 per unit of volatility. If you would invest  2,318  in Companhia de Saneamento on September 5, 2024 and sell it today you would earn a total of  222.00  from holding Companhia de Saneamento or generate 9.58% return on investment over 90 days.

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

OSX Brasil SA  vs.  Companhia de Saneamento

OSX Brasil SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Companhia de Saneamento

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia de Saneamento are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Companhia 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 OSX Brasil and Companhia

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

The idea behind OSX Brasil SA and Companhia de Saneamento 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.