Correlation Between Positivo Tecnologia and Seagate Technology

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

By analyzing existing cross correlation between Positivo Tecnologia SA and Seagate Technology Holdings, you can compare the effects of market volatilities on Positivo Tecnologia and Seagate Technology 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 Positivo Tecnologia with a short position of Seagate Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Positivo Tecnologia and Seagate Technology.

Diversification Opportunities for Positivo Tecnologia and Seagate Technology

0.51

Correlation Coefficient

Positivo Tecnologia  Seagate Technology

Very weak diversification

The 3 months correlation between Positivo and Seagate is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Positivo Tecnologia SA and Seagate Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seagate Technology and Positivo Tecnologia 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 Positivo Tecnologia SA are associated (or correlated) with Seagate Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seagate Technology has no effect on the direction of Positivo Tecnologia i.e., Positivo Tecnologia and Seagate Technology go up and down completely randomly.

Pair Corralation between Positivo Tecnologia and Seagate Technology

Assuming the 90 days trading horizon Positivo Tecnologia SA is expected to generate 1.95 times more return on investment than Seagate Technology. However, Positivo Tecnologia is 1.95 times more volatile than Seagate Technology Holdings. It trades about -0.03 of its potential returns per unit of risk. Seagate Technology Holdings is currently generating about -0.12 per unit of risk. If you would invest  616.00  in Positivo Tecnologia SA on October 22, 2024 and sell it today you would lose (68.00) from holding Positivo Tecnologia SA or give up 11.04% of portfolio value over 90 days.

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

Positivo Tecnologia SA  vs.  Seagate Technology Holdings

Positivo Tecnologia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Positivo Tecnologia SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Seagate Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seagate Technology Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Positivo Tecnologia and Seagate Technology

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

The idea behind Positivo Tecnologia SA and Seagate Technology Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.