Correlation Between Porto Seguro and Fleury SA

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

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

Diversification Opportunities for Porto Seguro and Fleury SA

0.02

Correlation Coefficient

Porto Seguro  Fleury SA

Significant diversification

The 3 months correlation between Porto and Fleury is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Porto Seguro SA and Fleury SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fleury SA and Porto Seguro 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 Porto Seguro SA are associated (or correlated) with Fleury SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fleury SA has no effect on the direction of Porto Seguro i.e., Porto Seguro and Fleury SA go up and down completely randomly.

Pair Corralation between Porto Seguro and Fleury SA

Assuming the 90 days trading horizon Porto Seguro SA is expected to generate 0.75 times more return on investment than Fleury SA. However, Porto Seguro SA is 1.33 times less risky than Fleury SA. It trades about -0.01 of its potential returns per unit of risk. Fleury SA is currently generating about -0.13 per unit of risk. If you would invest  3,859  in Porto Seguro SA on December 3, 2024 and sell it today you would lose (57.00) from holding Porto Seguro SA or give up 1.48% of portfolio value over 90 days.

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

Porto Seguro SA  vs.  Fleury SA

Porto Seguro SA

Risk-Adjusted Performance

Weak

Over the last 90 days Porto Seguro SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Porto Seguro is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Fleury SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fleury SA 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 Porto Seguro and Fleury SA

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

The idea behind Porto Seguro SA and Fleury 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.