Correlation Between Porto Seguro and Hypera SA

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

Diversification Opportunities for Porto Seguro and Hypera SA

0.64

Correlation Coefficient

Porto Seguro  Hypera SA

Poor diversification

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

Pair Corralation between Porto Seguro and Hypera SA

Assuming the 90 days trading horizon Porto Seguro SA is expected to generate 1.02 times more return on investment than Hypera SA. However, Porto Seguro is 1.02 times more volatile than Hypera SA. It trades about 0.14 of its potential returns per unit of risk. Hypera SA is currently generating about 0.12 per unit of risk. If you would invest  3,617  in Porto Seguro SA on December 30, 2024 and sell it today you would earn a total of  471.00  from holding Porto Seguro SA or generate 13.02% return on investment over 90 days.

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

Porto Seguro SA  vs.  Hypera SA

Porto Seguro SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Porto Seguro SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Porto Seguro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hypera SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hypera SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hypera SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Porto Seguro and Hypera SA

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

The idea behind Porto Seguro SA and Hypera 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.