Correlation Between Companhia Brasileira and Grazziotin

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

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

Diversification Opportunities for Companhia Brasileira and Grazziotin

0.46

Correlation Coefficient

Companhia Brasileira  Grazziotin

Very weak diversification

The 3 months correlation between Companhia and Grazziotin is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Brasileira de and Grazziotin SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grazziotin SA and Companhia Brasileira 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 Companhia Brasileira de are associated (or correlated) with Grazziotin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grazziotin SA has no effect on the direction of Companhia Brasileira i.e., Companhia Brasileira and Grazziotin go up and down completely randomly.

Pair Corralation between Companhia Brasileira and Grazziotin

Assuming the 90 days trading horizon Companhia Brasileira is expected to generate 1.31 times less return on investment than Grazziotin. In addition to that, Companhia Brasileira is 2.17 times more volatile than Grazziotin SA. It trades about 0.02 of its total potential returns per unit of risk. Grazziotin SA is currently generating about 0.06 per unit of volatility. If you would invest  2,383  in Grazziotin SA on December 4, 2024 and sell it today you would earn a total of  149.00  from holding Grazziotin SA or generate 6.25% return on investment over 90 days.

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

Companhia Brasileira de  vs.  Grazziotin SA

Companhia Brasileira

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Brasileira de are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Companhia Brasileira is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Grazziotin SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grazziotin SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Grazziotin may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Companhia Brasileira and Grazziotin

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

The idea behind Companhia Brasileira de and Grazziotin 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.