Correlation Between Raia Drogasil and Fleury SA

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

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

Diversification Opportunities for Raia Drogasil and Fleury SA

0.42

Correlation Coefficient

Raia Drogasil  Fleury SA

Very weak diversification

The 3 months correlation between Raia and Fleury is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Raia Drogasil SA and Fleury SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fleury SA and Raia Drogasil 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 Raia Drogasil 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 Raia Drogasil i.e., Raia Drogasil and Fleury SA go up and down completely randomly.

Pair Corralation between Raia Drogasil and Fleury SA

Assuming the 90 days trading horizon Raia Drogasil SA is expected to under-perform the Fleury SA. In addition to that, Raia Drogasil is 1.09 times more volatile than Fleury SA. It trades about -0.08 of its total potential returns per unit of risk. Fleury SA is currently generating about 0.02 per unit of volatility. If you would invest  1,158  in Fleury SA on December 30, 2024 and sell it today you would earn a total of  17.00  from holding Fleury SA or generate 1.47% return on investment over 90 days.

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

Raia Drogasil SA  vs.  Fleury SA

Raia Drogasil SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Raia Drogasil 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.

Fleury SA

Risk-Adjusted Performance

Weak

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

Pair Trading with Raia Drogasil and Fleury SA

The main advantage of trading using opposite Raia Drogasil and Fleury SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raia Drogasil 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 Raia Drogasil 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.