Correlation Between Pet Center and Natura Co

Can any of the company-specific risk be diversified away by investing in both Pet Center and Natura Co 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 Natura Co 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 Natura Co Holding, you can compare the effects of market volatilities on Pet Center and Natura Co 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 Natura Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pet Center and Natura Co.

Diversification Opportunities for Pet Center and Natura Co

-0.21

Correlation Coefficient

Pet Center  Natura Co

Very good diversification

The 3 months correlation between Pet and Natura is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Pet Center Comrcio and Natura Co Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natura Co Holding 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 Natura Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natura Co Holding has no effect on the direction of Pet Center i.e., Pet Center and Natura Co go up and down completely randomly.

Pair Corralation between Pet Center and Natura Co

Assuming the 90 days trading horizon Pet Center Comrcio is expected to generate 0.58 times more return on investment than Natura Co. However, Pet Center Comrcio is 1.72 times less risky than Natura Co. It trades about 0.02 of its potential returns per unit of risk. Natura Co Holding is currently generating about -0.04 per unit of risk. If you would invest  407.00  in Pet Center Comrcio on December 30, 2024 and sell it today you would earn a total of  2.00  from holding Pet Center Comrcio or generate 0.49% return on investment over 90 days.

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

Pet Center Comrcio  vs.  Natura Co Holding

Pet Center Comrcio

Risk-Adjusted Performance

Weak

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

Natura Co Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Natura Co Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 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 Natura Co

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

The idea behind Pet Center Comrcio and Natura Co Holding 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.