Correlation Between Razen SA and Caixa Seguridade

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

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

Diversification Opportunities for Razen SA and Caixa Seguridade

-0.19

Correlation Coefficient

Razen SA  Caixa Seguridade

Good diversification

The 3 months correlation between Razen and Caixa is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Razen SA and Caixa Seguridade Participaes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caixa Seguridade Par and Razen SA 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 Razen SA are associated (or correlated) with Caixa Seguridade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caixa Seguridade Par has no effect on the direction of Razen SA i.e., Razen SA and Caixa Seguridade go up and down completely randomly.

Pair Corralation between Razen SA and Caixa Seguridade

Assuming the 90 days trading horizon Razen SA is expected to under-perform the Caixa Seguridade. In addition to that, Razen SA is 1.51 times more volatile than Caixa Seguridade Participaes. It trades about -0.1 of its total potential returns per unit of risk. Caixa Seguridade Participaes is currently generating about 0.12 per unit of volatility. If you would invest  1,478  in Caixa Seguridade Participaes on September 12, 2024 and sell it today you would earn a total of  167.00  from holding Caixa Seguridade Participaes or generate 11.3% return on investment over 90 days.

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

Razen SA  vs.  Caixa Seguridade Participaes

Razen SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Razen SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Caixa Seguridade Par

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Razen SA and Caixa Seguridade

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

The idea behind Razen SA and Caixa Seguridade Participaes 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.