Correlation Between Pet Center and Hapvida Participaes

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

By analyzing existing cross correlation between Pet Center Comrcio and Hapvida Participaes e, you can compare the effects of market volatilities on Pet Center and Hapvida 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 Pet Center with a short position of Hapvida Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pet Center and Hapvida Participaes.

Diversification Opportunities for Pet Center and Hapvida Participaes

0.77

Correlation Coefficient

Pet Center  Hapvida Participaes

Poor diversification

The 3 months correlation between Pet and Hapvida is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pet Center Comrcio and Hapvida Participaes e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hapvida Participaes and Pet Center 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 Pet Center Comrcio are associated (or correlated) with Hapvida Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hapvida Participaes has no effect on the direction of Pet Center i.e., Pet Center and Hapvida Participaes go up and down completely randomly.

Pair Corralation between Pet Center and Hapvida Participaes

Assuming the 90 days trading horizon Pet Center Comrcio is expected to generate 1.58 times more return on investment than Hapvida Participaes. However, Pet Center is 1.58 times more volatile than Hapvida Participaes e. It trades about 0.03 of its potential returns per unit of risk. Hapvida Participaes e is currently generating about -0.08 per unit of risk. If you would invest  371.00  in Pet Center Comrcio on October 8, 2024 and sell it today you would earn a total of  31.00  from holding Pet Center Comrcio or generate 8.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.96%
Values	Daily Returns

Pet Center Comrcio  vs.  Hapvida Participaes e

Pet Center Comrcio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pet Center Comrcio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Hapvida Participaes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hapvida Participaes e has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

Pair Trading with Pet Center and Hapvida Participaes

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

The idea behind Pet Center Comrcio and Hapvida Participaes e 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.