Correlation Between Profarma Distribuidora and Ouro Fino

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

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

Diversification Opportunities for Profarma Distribuidora and Ouro Fino

0.64

Correlation Coefficient

Profarma Distribuidora  Ouro Fino

Poor diversification

The 3 months correlation between Profarma and Ouro is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Profarma Distribuidora de and Ouro Fino Sade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ouro Fino Sade and Profarma Distribuidora 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 Profarma Distribuidora de are associated (or correlated) with Ouro Fino. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ouro Fino Sade has no effect on the direction of Profarma Distribuidora i.e., Profarma Distribuidora and Ouro Fino go up and down completely randomly.

Pair Corralation between Profarma Distribuidora and Ouro Fino

Assuming the 90 days trading horizon Profarma Distribuidora is expected to generate 1.1 times less return on investment than Ouro Fino. But when comparing it to its historical volatility, Profarma Distribuidora de is 1.17 times less risky than Ouro Fino. It trades about 0.1 of its potential returns per unit of risk. Ouro Fino Sade is currently generating about 0.09 of returns per unit of risk over similar time horizon. 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	Significant
Accuracy	100.0%
Values	Daily Returns

Profarma Distribuidora de  vs.  Ouro Fino Sade

Profarma Distribuidora

Risk-Adjusted Performance

OK

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

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.

Pair Trading with Profarma Distribuidora and Ouro Fino

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

The idea behind Profarma Distribuidora de and Ouro Fino Sade 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.